If you’re self-employed as a sole trader and work from home, you could save money on your tax bill by claiming the ‘use of home as office’ allowance. Use this handy Working From Home Calculator to find out how much you could save!
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When working from home, you may incur additional household expenses directly related to your work. HMRC allows you to claim tax relief on some of these expenses, but only the portion used for business purposes. This ensures that you’re not out of pocket for the costs associated with maintaining your home workspace.
Here’s a breakdown of the main costs you can claim using the reasonable method approach:
You can’t claim for the parts of these bills that are used for private or domestic purposes. For example, if you use a room in your home as an office for 30% of the time, you could only claim for 30% of the heating costs attributed to that room.
The Simplified Expenses Method allows you to claim tax relief for using your home for business by applying flat rates based on the hours you work from home each month.
This method is easy to use but may not reflect your actual costs, potentially resulting in a smaller tax saving compared to the more precise Actual Cost Method, which calculates claims based on specific expenses.
Click here to learn more about the Simplified Method
The Actual Costs method calculates the proportion of your home used for business and applies it to your actual bills.
For example:
If your home has 4 rooms, and you use 1 as an office 50% of the time, with a £400 electricity bill, your claim would be:
£400 × 1/4 × 50% = £50.
Include your ‘main’ rooms, like bedrooms, living rooms and kitchens (but not hallways or bathrooms).
Calculations can get tricky, but our Working From Home Calculator simplifies it all. Just ensure you keep records and evidence of your expenses for HMRC.
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