What expenses can I claim when working from home?

You may be able to claim tax relief for some expenses incurred because of working from home but HMRC rules are complex and are different for limited companies and sole traders.

Limited companies

The simplest method is to claim HMRC’s published allowance of £6 per week to cover the additional costs of running your business from home. No receipts need to be kept and HMRC doesn’t treat this as a benefit in kind.

To claim a higher amount, a non-exclusive license agreement could be put in place between you and your limited company. Any income received will need to be included on your personal tax return and after deducting expenses, the profit will be subject to income tax at the appropriate rates. Typically, we find that the taxable profits which arise, and the administration involved in setting up an agreement such as this often outweigh any benefits over and above the £6 per week allowance.

Internet and telephone costs can also be claimed but these should be clearly separated from personal use (i.e. a dedicated business broadband connection) with any contracts in the name of your limited company.

Sole traders

Self-employed individuals can claim a flat rate per month based on the number of hours the home is used for business. This is in addition to a proportion of telephone and/or internet expenses.

25 to 50 hours of business use per month = £10 rate per month (flat rate)

51 to 100 hours of business use per month = £18 rate per month (flat rate)

101+ hours of business use per month = £26 rate per month (flat rate)

Alternatively, you can work out your actual costs by calculating the proportion of personal and business use. 

Advice and guidance can vary on a case by case basis so if you would like to obtain further information, including an answer tailored to your specific circumstances, please do get in touch and we would be more than happy to help.