COVID-19 has caused massive changes to the way we live and work, with everyone having to adapt in accordance with changing restrictions. With this in mind, we are aware that many of our clients, as well as their employees, may be working from home.
Whether you're working from home because of the virus, or you run your business from home anyway, it's likely that you will be using more electricity, more gas and may even need to purchase additional office equipment.
With all of this in mind, are there any expense benefits from working in the comfort of your own home? Here, we provide an answer to the question 'which home office expenses can I claim for?'
If you are running a business from your home, you can make a wide range of expenses claims for any costs incurred as part of your operations.
For example, you may be able to claim for your energy bills, rent, mortgage, internet, telephone, council tax and some property repairs.
You may also be able to get tax benefits when buying office equipment for your home office
1. Flat Rate Calculations
When calculating the costs of your home office expenses, you can do so with the flat rate method.
This system requires you to calculate the number of hours per month you are operating a business from your property and apply the flat rate to that calculation.
This method can only be used to calculate costs for your energy, heat and light.
If you work between 25-50 hours per month, you are entitled to £10 per month. Up to 100 hours equates to £18 per month. More than 101 hours a month entitles you to £26 per month.
Benefit- this option can save huge amounts of time. If you're busy and your expense calculations are the least of your worries, this can provide you with ample efficiency. Downfall- you may end up getting less than you are entitled to as it is a less accurate method of cost calculation than comprehensively analysing the costs.
2. Analyse Costs
Analysing the costs more comprehensively is more complicated and time-consuming, but it is also more accurate.
This strategy for claiming home office expenses will depend on the type of work you do at home, as well as the kind of business you run and what you want to claim for.
You'll need to accurately attribute the amount of time you spend at home doing your work. In other words, you need to be able to balance out the costs associated with living and the costs associated with working.
To do this, you will need to ascertain which of the rooms within your home you use for work and how often you use them to operate your business.
Example- If you have an office space and you use it 50% of the time for actual work, you would calculate all of the costs associated with your work, multiply it by the fraction of the number of rooms in your house (if you used 1 of the 5 rooms in your home this would be 1/5 ) and then by 50%. This would provide you with the accounts figure you require for your business use.
If you need any advice or additional information about claiming home office expenses, contact our friendly team of accountants today!
Our ambition is to help all of our clients (both businesses and individuals alike) to remain tax-efficient and to stay on top of their finances by planning ahead.