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Working from Home Expenses for the Self-Employed

self-employed

As the UK continues it’s battle with Covid-19, many self-employed contractors have found themselves completing more work from home than they usually would. Since many expenses rely on your travelling to a temporary workplace, in this article we’ll look at what you can claim if you’re working from home.

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Who can claim?

You can claim working from home expenses if you run your business from home, or if you have to work from home on a regular basis. This can include those who have to work from home due to coronavirus.

What you can claim

You can claim expenses for the cost of running your business from home. There are two ways to do this, using a flat rate, or claiming the actual costs. The flat rate amount is £6 per week, or £208/year. You can claim this without evidence of the additional costs. The flat rate does not include phone or broadband costs, you should claim these separately.

Calculating the proportion of business costs

If you prefer, you can claim for the actual cost of running your business from home, including the proportion of specific costs for light, heat, insurance and other household costs. Government guidance states that you must use a “reasonable method” to calculate these costs. You can’t claim for costs that remain the same whether or not you worked from home, like rent, mortgage interest or council tax.

Here is an example of an established “reasonable method” for calculating working from home expenses:

self-employed

Phone and broadband costs

Whichever option you choose, you will need to claim separately for your phone and broadband costs. Claims should be based on the volume of business usage for the line/connection. You can only claim for line rental if this is exclusively a business cost – so the line/connection would have to be only for business use and you would need to have a separate one for personal use.

If business use has not increased the cost, or you cannot clearly separate your business costs from personal use, for example if data and calls are included in your package, you should not claim.

Ensuring mixed use

It’s a good idea to ensure that the area of your home that you use for business is also used for something else – for example, letting the kids use your office to play computer games at the weekend. If the space is used exclusively for business, there’s a risk that a proportion of your home could be subject to capital gains tax when you sell it.

If you have questions or if we can help in any way, please call our expert team on 01296 468483 or email info@orangegenie.com.

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