Home Office Expenses

Published - Jul 03, 2019

When you are just starting out in business, you need to keep your expenses down as much as possible. As a result, most start-up businesses will operate from a home office. Depending on the nature of the business, this can even prove a viable long-term solution.

This means that a proportion of the household expenses are going towards providing the business with office space. It is possible to claim a tax-deductible expense in the accounts of a business to represent the “cost” of this home office. There are two ways of arriving at a figure for this.

The first is to use simplified expenses. These are amounts that HMRC have agreed they will accept based on the hours worked each month. These only cover the cost of the office itself, with telephone and internet costs claimable separately. The current monthly rates are as follows

  • 25 to 50 hours per month - £10.00
  • 51 to 100 hours per month - £18.00
  • 101 or more hours per month - £26.00

As these amounts are fairly low, anyone with an appreciable amount of home office use will likely want to calculate the cost instead. This is done by taking the household costs and working out the amount related to business use. This is based on the area of the house used for business, and how much of the total use of that area is for business purposes. The expenses included in the calculation are

  • Council tax
  • Gas and electric
  • Water
  • Repairs and maintenance
  • Mortgage interest or rent
  • Buildings and contents insurance.

Posted in Sole Traders on Jul 03, 2019