If you work from home, you may find you’re spending more on household bills or home office equipment. Did you know that you may be able to claim back the cost of working-from-home expenses if you’re self-employed? Read below to find out which expenses are tax-deductible!
Technically, anything you have to pay for is an expense. But because we’re talking tax, expenses are costs incurred from running your business. You can claim these costs against your earnings to reduce your tax bill.
You’ll want to remember this golden rule when it comes to expenses: they must be incurred wholly, exclusively and necessarily for the running of your business to be tax-deductible.
You can claim pretty much any cost you can prove you’ve incurred solely from running your business from home. This might be:
Think of it like this.
You’re a self-employed baker. You find that your home electricity bill has rocketed compared to when you worked in an external kitchen (sob). Because you’re using a percentage of the electricity for work, you’ll be able to claim this as an expense.
Buttttt! 🖐️
This doesn’t mean that you’ll be able to claim your entire electricity bill as an expense (unless you can prove it was used wholly for work). So, be sure to leave out the electricity units that were used for the Sunday roasts. 🍽️
Expenses aren’t an automatic tax relief. It’s on you to include them on your Self Assessment tax return.
Although you don’t have to send proof along with your tax return, you do have to keep receipts. You never know when HMRC will ask to see proof (better to be safe than sorry! 😅)
You should keep proof of expenses for at least three years. This can be:
👉 Remember, expenses are different to the home office allowance (which leads us to our next question!)
The home office allowance is a flat rate amount you can claim back if you use your home for work. The amount you can claim depends on how many hours you work from home per month.
Because of this flat rate system, you won’t have to go around your home with a measuring tape calculating exactly how many centimetres of it you used for work! (Thank goodness😅).
Instead, you’ll just use these rates to work out how much you can claim:
| Hours of business use per month | Flat rate that you can claim |
| 25 – 50 hours | £10 per month |
| 51 – 100 hours | £18 per month |
| More than 101 hours | £26 per month |
Just like the home allowance, there are other ways you can claim expenses if you don’t particularly fancy adding up all your expenses and documenting the proof.
If you’re self-employed and earn less than £1,000 a year, you won’t have to report or pay tax on this income.
However, you can also use this allowance against your expenses (if they’re under £1,000.) The best part? You don’t need receipts to claim the trading allowance. 🚮
If you use your car for work, you can claim the mileage allowance. How much you can claim depends on how much you travel for business.
For a car or van, the rate is currently 45p/mile, which goes down to 25p/mile for every mile after your first 10,000 miles. Confused? Our mileage allowance guide can help with that!
Leave it with us! Whether you need help understanding what expenses you can and can’t claim, or you just want someone to sort the whole thing for you, we’re more than happy to help.
Learn more about our services here.
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