What You Can Claim As Business Expenses – Use Of Home As Office

The same rules apply for soletraders, partnerships and Limited Companies.

If you use any part of your house to run your business from you can charge the business for the personal cost of making that space usable and secure.  There are no specific calculations set out by HM Revenue and Customs for this, so it’s a matter of applying a formula that makes sense to you and that does charge the business a disproportionally high amount.

Most people might have a desk/office space set up in a room that is also used for domestic purposes, e.g. a dining room, or have a small room set up as a full time office.  The Revenue would not question a charge of £2 – £3 per week going through the business accounts to cover the costs of this.

If you think that you should be charging your business a higher amount than this, then you need to justify this by putting together a quick calculation to back up your claim.  The simplest way of approaching this is to add up how much the utility bills for your house cost you in a year. i.e. include council tax, house insurance, gas and electricity bills.  Then divide by the number of rooms you have in your house; this will give you a best guess at the cost of running a room.  If you have a dedicated office then claim this amount; if you use a room for business purposes during the day, but then for domestic purposes during the evening/weekend then maybe claim half this amount.

You can also claim for the cost of redecorating your office space at home, or any other expense incurred in keeping this room usable. 

You may be told that you can also claim a proportion for any external work that you have done to your house, or that you can include your mortgage interest payments with your utility charges in the calculation mentioned above.  Whilst this is in fact correct, by doing this you do run the risk of treating your house a partly business premises for several years.  If there comes a time when you want to move house it is quite possible that the Revenue will then expect you to pay capital gains tax on any profit you make on the proportion that you have treated as business premises.  In short you can’t have it both ways.  By all means claim these capital items as they occur if you wish, but be prepared possible consequences.

What You Can Claim As Business Expenses main page.

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