Do you work from home? Are you aware that you can claim a variety of costs from HMRC?

Most people working from home have claimed the £4 per week allowance based on HMRC guidance, but this has now been updated.

Vincent&Co Working from homeYou can now calculate your allowable expenses using a flat rate based on the hours you work from home each month.

 

This means you don’t have to work out the proportion of personal and business use for your home, such as how much of your utility bills are for business.

The flat rate doesn’t include telephone or internet expenses. You can claim the business proportion of these bills by working out the actual costs. Be aware that you can only use simplified expenses if you work for 25 hours or more a month from home.

Hours of business use per month

Flat rate per month

25 – 50 £10.00
51 – 100 £18.00
101 and more £26.00

 

Example:
You worked 40 hours from home for 10 months, but worked 60 hours during 2 particular months:
10 months x £10 = £100
2 months x £18 = £36
Total you can claim = £136

Use the simplified expenses checker to compare what you can claim using simplified expenses with what you can claim by working out the actual costs:
https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home

Alternatively you could claim you can claim a proportion (based on the number of rooms and hours of business use) of your household expenses:

Mortgage interest or rent
Council tax
Water rates
Repairs and maintenance
Building and contents insurance
Electricity
Gas, oil or other heating costs
Cleaning
Telephone (based on usage)
Broadband

You can draw up a home rental agreement to reclaim these costs. This rental agreement can be very basic, it just needs to show:

The Parties – Employee, Company, Home Office Address
The agreement is for use of the accommodation, furniture etc (‘the Home Office’)
The hours it will be used
The rental charge

If the rental is only to cover costs (and not to make a profit) then it should not create any tax liability.

There are also other issues to consider such as VAT and Capital Gains.

We help many small businesses to claim their entitlements so call Vincent & Co for more information.