Directors can claim a flat rate of £4 per week (excluding business calls) without keeping any receipts or having to do any calculations. In reality this amount probably won’t be enough to cover all your costs if you work a significant numbers of hours from home.
The alternative to the flat rate is to work out the proportion of bills used by the business. This only applies to heat and light, anything you would pay for whether or not you are at home can’t be claimed for.
Expenses you can’t claim a portion of include:
- Mortgage Interest
- Home Insurance
- Council tax
- Repairs and cleaning bills
- Broadband/line rental if they are shared by the household
To work out what you can claim you use the apportionment/shared method.
This can either be based on the number of rooms used for business or on the percentage floor area used.
The steps are:
- Calculate the number of rooms in your home (you don’t need to include halls or bathrooms).
- Identify the number of rooms you use for business.
- Work out what percentage of time you spend working in each room. Base this on the number of hours a day a room is used, if a room is used for 10 hours a day and you work in it for 3 you can claim 30%.
- Total the bills you are apportioning then divide by the number of rooms giving you the cost per room.
- Finally work out the percentage of the cost for each room you can claim then record this in your accounts.
If you have dedicated phone and broadband for your business then you can claim all of this, if not you can only claim the cost of business calls made on your home line.
Don’t forget the way home office expenses are treated is different for Sole Traders find out what sole traders can claim here
It is important you keep records that can back up your claim – a diary logging hours worked at home for example. Your apportionment should be reasonable, documented and stand up to scrutiny by HMRC. We recommend that you do not to over-claim because this could trigger an HMRC aspect or full enquiry.
For help working out which method suits your business request a free consultation Find out more about our best selling packages .