Claiming your household expenses

If you trade partially or fully from home, you may claim for a proportionate use of the property for the purposes of your trading activities.

Whilst there are several possible methods for calculating the business proportion, the main criteria to consider are:

  • How much space is set aside for business purposes (whether solely or in conjunction with some private use – e.g. a spare bedroom)
  • The time that the space is used for the trading activity

For many, it is often possible to quite simply use a proportion based on the number of rooms in your home (excluding kitchens and bathrooms) to calculate the claimable proportion of your overall household expenses.

However, if you were to have an enquiry with regards to the use of your home it is likely that HM Revenue and Customs would request a more accurate method of calculating this expense using floor area and the amount of time that you spend in that room for trading purposes.

If you are looking to claim a particular room is used exclusively for business, whilst you may be able to claim a higher proportion of your household expenses, you may also find upon the sale of your of house that you are taxed on an equivalent proportion of the gain upon sale, which would usually be exempt from capital gains tax. In addition, your local council may attempt to charge business rates on this proportion of your home should they become aware of the situation.  

What sort of expenses can you claim for?

Like any business activity, financial traders can claim for any costs which are associated with the trade such as broker’s fees, broadband subscriptions, travelling, bank charges, telephone costs, etc.

However, if you were to trade from home, it is also possible to claim a proportion (based on time and space of course) of the following costs:

  • Mortgage interest or rent
  • Council tax
  • Water rates
  • Repairs and maintenance (unless solely attributable to another part of the property)
  • Buildings and contents insurance
  • Electricity, gas, oil or other heating costs
  • Cleaning
  • Telephone and internet costs
  • Computers or office equipment (via capital allowances)

If you do not wish to undertake any form of calculation or retain any evidence of the proportional split, HM Revenue and Customs will allow anyone working from home in any types of business to claim a flat rate of £4 per week, although in practice this is usually quite low.

Of course if you wish to maximise your claim for household expenses against your taxable profits, an accurate calculation of the proportional expenses would be recommended. For further help and advice, contact a member of our team on 01474 853856.


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