Working from home is the ultimate dream for some people. The thought of being able to step out the office into the living room to catch up on your latest binge-watch-boxset, making your favourite coffee in your own kitchen and maybe even going for a mid morning shower or working in your PJs. The dream can be real! There are certain things that are trickier when you work from home though and one of those is claiming your costs back.
If you hire out an office or even a desk, you know exactly how much you are being charged as you are paying it weekly, monthly or annually. This isn’t an option for many small businesses and so perhaps you work from the kitchen table, a corner of the dining room or even set up a home office? When you work from home things are slightly different. You can actually work out how much you can claim back, or you can use HMRC’s flat rate, know as simplified expenses.
These flat rates differentiate depending on how many hours you work from home each month and fall into three categories. As long as you work for more than 25 hours a month from home, you can use these simplified expenses from Her Majesty's Revenue and Customs.
If you work between 25 – 50 hours a month, you can claim £10 per month.
For those who work 51 – 100 hours a month, you can claim £18 per month.
Home based folk who work 101 hours or more per month can claim even more, the amount for you is £26 per month.
So if you work 15 hours a week from home and we take the average of four weeks in a month, that’s 60 hours, so £18 a month you could claim. Work that out over 12 months and that’s £216. The minimum you could claim would be £120. The maximum would be £312.
Of course, you could work out exactly how much you can claim, but the general consensus is that these flat rates more than cover what you could claim. You’d have to figure out the square footage of your property, the percentage of your business use and all of this can take time and effort, plus you’ve no guarantee that you’ll be able to claim more. If you work from home 40 hours a week, simply putting £312 work from home expenses on your tax return is far simpler.
HMRC also have simplified expenses for business related vehicle costs & costs when you live in your business premises. Don’t forget that these are not going to work for everyone and you could be better off working out your working at home expenses, especially if you have a large dedicated office. Speak to your accountant who can advise further. Don’t have an accountant? Get in touch with Clare at Bruton Young Bookkeeping who can be your accountancy hero, working on VAT returns, payroll and tax.