What expenses can I claim when working from home?
If you’re a freelancer, sole trader or self employed in any other way, you were probably working from home way before COVID-19 was on the scene, right? You might even say that you were the pioneers of flexible working before everyone was doing it!
Nowadays, the amount of people working from home has increased massively due to COVID-19. Not really a big surprise, is it? During April 2020, 46.6% of people did some work at home, with 86% doing so as a result of the pandemic.
So if you’ve recently started working from home on a regular basis, you’ve probably found yourself asking the all important question:
‘What expenses can I claim when working from home?’
The answer? Not as straightforward as you might expect.
HMRC has rules and regulations in place around what you can and can’t claim when working from home when you’re self employed. But don’t worry – we’re here to break it down for you!
So let’s get stuck right in…
What home office expenses can I claim for?
To put it simply, you can claim for things that directly relate to your work.
Lucy Cohen, Mazuma’s awesome co-founder and director, outlines what you can claim for in more detail:
“The first thing to remember is that, as a very general rule, anything that you have purchased wholly and exclusively for use in your business is tax deductible, with some exceptions […]!
But a good start is knowing that the following are all broadly allowable:
- office costs, eg stationery or phone bills
- travel costs, eg fuel, parking, train or bus fares
- clothing expenses, eg uniforms
- staff costs, eg salaries or subcontractor costs
- things you buy to sell on, eg stock or raw materials
- financial costs, eg insurance or bank charges
- costs of your business premises, eg heating, lighting, business rates
- advertising or marketing, eg website costs
So, that list should give you a really good idea of where to start. It’s obviously not a complete list. But it should give you an idea.”
Check out the full video below:
And you can read the full transcript too!
So, things such as telephone calls or extra electricity would be acceptable, as you’re only using these things directly for your work. But anything that you use for both private and business use can’t be claimed for. This falls under the ‘duality of purpose’ rule…
What is the duality of purpose rule?
Anything that’s not wholly and exclusively purchased for business use is classed as having a dual purpose.
For example, you’d have a really tough time arguing that your TV license fee should be claimed as a business expense under “use of home as an office”. The chances are that you’d have it anyway, regardless of whether you worked at home or not .
So unfortunately, not all expenses are tax deductible – although there are a few exceptions to this rule which you can read all about below in our FAQs.
Is rent tax deductible while you’re working from home?
No, your entire rent isn’t tax deductible. But there are some aspects of working from home that enable you to make a claim. This includes potentially internet and Wifi, and office furniture – we’ll get to this later on!
And while rent isn’t wholly deductible, the good news is that you can claim some money for your home office. Keep reading…
How much can I claim for home office?
It can be tricky to answer the question: how much can I claim for home office? That’s why HMRC let you claim up to £6 a week of expenses without needing to provide paperwork to claim it! It’s possible to claim more than that, but you’ll need the paperwork to back it up.
If you’re using a home office, you might be eligible to claim certain expenses – but you must prove that you regularly do your job in this office space. You can’t do the odd bit of admin at home, but spend most of your time off-site, and claim to have a home office. That won’t fly with HMRC.
If most of your actual work is done off-site, you cannot claim for home office. But if you do spend most of your working time in a home office, you can claim for some expenses.
The amount you claim must be reasonable and can only relate only to the space you use for work. HMRC uses the following example:
You have 4 rooms in your home, one of which you use only as an office.
Your electricity bill for the year is £400. Assuming all the rooms in your home use equal amounts of electricity, you can claim £100 as allowable expenses (£400 divided by 4).
If you worked only one day a week from home, you could claim £14.29 as allowable expenses (£100 divided by 7).
HMRC also has a simplified expenses checker for all you workers from home out there that you can use to help you decide which method is best for you when claiming expenses. Or if you’d prefer, you can always seek advice from an accountant to calculate these costs for you – hint hint, Mazuma can help.
Find out more about how much you can claim in our blog: What home office expenses are tax deductible and how much can I claim?
Can I make a claim for my internet and Wifi?
If you’re using the same internet connection you use outside of work, you won’t be able to claim due to duality of purpose (remember that from earlier?). But there is an exception…
If there is a separate broadband line that provides internet solely to your home office, you can claim all of the costs from that separate line.
Can I make a claim for home office furniture?
In some cases, it’s possible to claim office furniture as a tax-deductible expense so long as it is used wholly and exclusively for work. So whenever you purchase office furniture or equipment, make sure you keep a record of it!
How do I claim expenses from working at home?
Now we’ve gone through all the boring bits, it’s time to look at something a bit more fun – making a claim!
If you’re self-employed, you are only able to claim via a self-assessment tax return, which you should be familiar with by now! Your WFH expenses will be deducted from your profit and reduce the amount of tax you’ll pay.
You can find out more about allowable expenses while working from home on our other blog post.
You can also check if you’re eligible to claim on the HMRC website.
So, what now?
As you can probably tell from reading this article, there’s no one answer to the question: what expenses can I claim when working from home? HMRC’s regulations are pretty complex (did we really expect anything less?).
That’s why we’d strongly suggest reaching out to an online accountant – like us here at Mazuma – to get all this sorted for you. That way, you can spend time focusing on actually running your business!
Let us take the weight off your shoulders – it’s what we do best.
Get in touch today for a free quote. We can’t wait to hear from you ✌️