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Use of home claims for the self employed

2018-03-19

We will take a look at some of the most commonly claimed home office expenses here.

The basic rules

As with all types of expenses, the golden rule is that any costs you claim for must have been genuinely incurred in the course of running your business.

When working out how much of your household expenditure could be fairly reclaimed for business use, HMRC states: “It will normally be appropriate to apportion these expenses by area and time.”

What can you claim for?

Some of the most common household expenses you can claim a proportion of include:

Mortgage interest (you can’t claim for the capital repayment element of a mortgage)
Rent
Council Tax
Water
Electricity
Heating
Home insurance (if at also covers your business)
Repairs
Cleaning costs

For a full list, read HMRC BIM47820 which deals with specific deductions for the use of home by the self employed

How do you work out the proportion of household expenses to claim for?

If you’re self-employed, you can claim back some of your home working costs if you use a “reasonable” method to calculate the total amount.

Here is a well-proven method. The steps, roughly, are as follows, with an example:

Count the number of rooms in your house (7 in this example)
How many of these rooms do you use for work? (2 – the living room, and an office).
How long do you use these rooms each day (percentage)? (living room 10%, office 80%)
Divide each bill by the number of rooms in your house (e.g. £490 annual electricity bill, divided by 7 rooms = £70 per room)
Multiply the bill’s room cost by the percentage of the day that room is used for business purposes (living room = 10% x £70, office = 80% x £70)
So, for the electricity bill, your total claim using this method is £7 (living room) + £56 (office) = £63
Repeat this step for each household bill you want to claim against.

HMRC has provided several examples of how to apportion household expenses to your business in BIM47825.

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