Claiming Work from Home Expenses for the Self Employed

By Kate | October 5, 2022

Are you a self-employed sole trader, or in partnership, and work from home? If so, you can claim work from home expenses through your Self-Assessment Tax Return. Continue reading to understand your available options, and how much you could claim.

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What Can the Self-Employed Claim?

UK sole traders and partners have two options for claiming work from home expenses:

Claim simplified expenses
Calculate actual business costs

If you’re a homeowner and use a garage/room exclusively for business, note that whichever option you choose could bring about a Capital Gains Tax bill if you come to sell (unless rooms have dual purpose, e.g. a music room that’s also a guest bedroom). Contact us today if you’d like to discuss your individual circumstances.

Option 1: Work from Home Simplified Expenses

As a sole trader or partner, if you wish to claim simplified working from expenses, HMRC offers flat rates. These are for household costs and are based upon your monthly working hours. For the 2022/23 tax year, these rates are:

25-50 hours: £10 per month
51-100 hours: £18 per month
101+ hours: £26 per month

For example, if you work over 101 hours every month, this comes to a total of £312 per year – the advantage being that you don’t need to calculate actual costs or keep records of receipts and invoices as evidence for HMRC.

You can still make a separate deduction for fixed household costs like mortgage interest, council tax and insurance – as well as phone or broadband bills – if you can identify the business use elements. Read more on the following option to understand how to claim these types of expenses.

Option 2: Calculate Actual Business Costs

Another option is to work out the actual business costs of your household expenses, such as:

Phone and broadband
Electricity, heating, and water bills
Mortgage interest or rent, insurance, and council tax
Repairs and maintenance
Cleaning

However, you must only claim the business proportion of these costs and show how you calculated it from copies of all your invoices and receipts – whether that’s by apportioning floor space or the time spent. It varies dependent on circumstances, an example being:

Jane is a work-from-home freelancer and uses her guest room as an office throughout the week. This room accounts for 20% of the house’s floorspace, and she uses the room to work for 5 days per week. Her total bill for light and heat comes to £700 for the year (a very small home). So, 20% x 5/7 = £100, which is the allowable business use element of Jane’s electricity bill.

Need Help with Work from Home Expenses?

Mercian Accountants offers bookkeeping and accounting packages for the self-employed, so you can concentrate on building your business. Looking for advice on claiming work from home expenses? You can contact us through our online form, call 01743 562430, or email hello@mercianaccountants.co.uk today.