With more of us having the ability to work from home make sure you are claiming the correct expenses back in your business. If your home office is your main workplace then you can claim back some of your costs, in general these are split into four different categories.
limited company & flat rate
A flat rate of £6 per week (£4 up to 5th April 2020) can be claimed against the company profits.
unincorporated & flat Rate
The flat rate for unincorporated business (sole traders etc) is split based on the number of hours worked at home each month. Don’t forget a standard working month (Monday to Friday 9 to 5) is roughly 150 hours!
- For 25-50 hours a month you can claim £10 a month
- For 51-100 hours a month you can claim £18 a month
- For any hours over 101 a month you can claim £26 a month
limited company & higher amount
This is where it gets a little more involved, to be able to claim a higher amount than those stated above you will need to enter into an official rental agreement with your company. the rental price is usually a share of your average monthly bills (mortgage interest, council tax, rates etc) split based on the number of rooms used for business. For example, if you have 5 rooms in your home (excluding hallways, kitchens and bathrooms) and one is used for business then the rental price would be 1/5th of these costs.
However, any repairs costs for the home office can be claimed back at the full cost but any repairs to any other rooms cannot be claimed at all. where the repairs costs relate to the house as a whole (i.e. repairs to the roof) the cost will be split as above and the portion relating to the home office can be claimed.
unincorporated & higher amount
As an unincorporated business you can’t charge rent in the conventional way, so no agreement is required. Instead, you can claim back an amount against your profit in the same way as for a limited company.
The only other pitfall to be mindful of is to make sure that any room in your home isn’t used solely for business to avoid any potential capital gains tax issues. Try putting home gym equipment in the room or a home cinema or gaming setup. you can also block out specific times where the room is not available for business use, just remember to keep records for this.
