H is for Home Office - A to Z Accountancy Top Tips
This is such a big topic this year for obvious reasons.
Working from home looks likely to continue for some time, so what can you claim?
There is tax relief for working from home for employees, directors and self-employed.
If you must work from home from 6 April 2021 you can claim tax relief on £6 per week.
If you have had to buy equipment to do your work such as a desk, chair or laptop and your employer hasn’t given you the money for it then you can also claim tax relief on these items.
If you do a tax return you can enter these on there, or you can do a claim on the government website.
Both directors and self-employed can claim the cost of office furniture and fixings required to work from home. But what about the actual costs of running the home?
Director of a limited company
Directors used to be able to claim £4 per week but from 6 April 2020 this increased to £6 per week. HMRC feels this is sufficient to cover most cases and therefore doesn’t need any supporting documents.
If you work from home on more permanent basis then you may be able to claim additional expenses incurred but you need to be able to justify this.
- Count all the normal rooms in your home (don’t include hallways / toilets etc)
- Work out the rooms that you work in and how long for E.g. Living room is used for 10 hours each day – 2 of which is working this will be 20% business use.
- Divide each bill by the number of rooms you counted in step 1
- Times by the percentage you worked out in step 2
Self-employed working from home
Again, there is a fixed rate you can claim without any records based on the hours you work:
25-50 hours per month £10 / month
51-100 hours per month £18 / month
101 + per month £26 / month
Or you can calculate the actual costs in the same way as the example for the director, so by calculating the number of homes and the time used for business, to work out the proportion of your costs. However, as a sole trader you may be able to claim council tax, mortgage interest and telephone use as well as gas and electricity.
Again, please ask for a template for the calculation if needed.