You can only claim for “allowable expenses”. The HMRC describes these as the expenses you have incurred for the,
“travelling you had to do whilst doing your job”
“expenses you had to pay whilst doing your job and which related ONLY to doing your job”
There are also a few other factors that determine how much you can claim. Whether you are self employed or employed is one. How often you work from home is the second. And the third is whether or not you have a choice in working from home.
If you are self employed and work solely from home then you can claim back part of the costs for household bills such as water rates, gas and electricity as you are effectively using more energy in order to carry out your work. You could potentially even claim for a relief against your council tax, rent, home insurance and mortgage payments as these are also things that need to be paid in order for you to not only live in your home, but also work there. However, it is not beneficial for you to have a room dedicated solely to work, such as a home office that is private or out of bounds to the rest of the family. This is because it could cause problems further down the line regarding Capital Gains as your Only/Main Residence is now being used for work too. This usually reduces any gain to zero. It could also impact on your home insurance. It is therefore much better to simply have certain times that it is a “work zone” and other times for more recreational or family use.
If you are working mainly from home then the method to work out roughly what you should attempt to claim follows this simple formula:
Total bills (water, electric, gas etc) ÷ number of rooms in the house = Amount A
Amount A x number of rooms used for work = Amount B
Amount B should be relative and in keeping with the type of business you run. As if you try to claim a little extra than normal, this will often be noticed by HMRC and in turn cause them to investigate. This is also the same situation if the second method of estimation is used. This option would be used if you work rarely or inconsistently from home. Common sense says that if you are only doing small amounts of paper work from home then far less energy will be used as opposed to if you were running the business solely from home. However this does not stop people slightly exaggerating their claims. There are no set limits or levels for particular trades but the main objective is to stay consistent and in line with your normal household bills and type of work.
The other way that you should be able to claim working from home is through fixed HMRC allowance. In the main the taxman will not ask questions if you claim these allowances. You will get a flat rate deduction of £3.00 per week (from 2008-09) for each week that you’ve got to work at home, this doesn’t include the cost of business telephone calls
Written by Becky Drummer-Jones
If you would like any further information, please do not hesitate to contact Southside Accountants Colliers Wood.