We are often asked various questions by dental associates about their tax affairs. This month we answer the following question:
What costs can be claimed when I work from home?
For the self-employed, a claim can be made for expenses incurred when working from home. Two options are available.
Firstly, using the simplified expenses regime a flat rate can be claimed based on the number of hours worked at home on business each month, subject to a minimum of 25 hours:
| Hours of business use per month | Flat rate allowance |
| 25 to 50 | £10 |
| 51 to 100 | £18 |
| 101 or more | £26 |
The flat rate allowance does not include business telephone calls or internet costs; the business proportion of these can be claimed as well.
Please note that the simplified expenses regime cannot be used by limited companies or partnerships with a limited company partner.
The second method is to claim a proportion of the actual costs incurred, for example heating, electricity, Council Tax and mortgage interest / rent. Factors to consider are the area of the home used for business, how much time the area is used and the usage of variable costs such as electricity or gas.
For example, you could apportion costs based on the number of rooms in your house, then apportion by the number of hours of business use the room is used for. Alternatively, a different method of allocation might be reasonable. Obviously the apportionment of actual costs is more complicated and if business use is not that significant a reasonable estimate consistent with the underlying facts may suffice!
One final note of caution – if you use a room of your house solely for business use you could lose part of your Private Residence Relief for Capital Gains Tax purposes when the property is sold. This can be overcome by ensuring any room used for business is also used for domestic reasons.
The information published within this document has been prepared as a guide to topics of current financial and business interest. This information does not constitute professional advice; we strongly recommend you take professional advice before making decisions on matters discussed here. Although we endeavour to ensure such information is accurate and up-to-date, we make no representation or warranty whatsoever as to the accuracy or completeness of the information and accept no liability for any loss whatsoever arising from your use of such information.