Which Home Office Expenses Can I Claim for and How?
One of the numerous changes in the way we live, which has been thrown up due to the COVID-19 pandemic, is the growth in the number of employees working from home. Back in June, the Office for National Statistics (ONS) indicated that just under half of workers reported working from home. Just two months later, a study from the universities of Cardiff and Southampton reported that nine out of ten employees 'would continue working from home'. As well as being a necessity during the peak of the pandemic, working from home has now actually become desirable. The same study reported that 30% of those asked indicated that they were more productive when working from home.
Whether you're working from home because of COVID, or you run your business from home, it's likely that you will be using more electricity, more gas and may even need to buy more office equipment. With all of this in mind, are there any expense benefits from working in the comfort of your own home? Here, we provide an answer to the question 'which home office expenses can I claim for?'
What Expenses Can You Claim For Home Offices?
If you run a business from your home, you can make a wide range of expenses claims for any costs incurred as part of your operations. For example, you may be able to claim for your energy bills, rent, mortgage, internet, telephone, council tax and some property repairs. You may also be able to get tax benefits when buying office equipment for your home office.
How To Calculate The Amount You Can Claim for Your Home Office
Flat Rate Calculations
When calculating the costs of your expenses when working from your home office, you can do so with the flat rate method. This system requires you to calculate the number of hours per month you are operating a business from your property and apply the flat rate to that calculation. This method can only be used to calculate costs for your energy, heat and light.
If you work between 25-50 hours per month, you are entitled to £10 per month. Up to 100 hours equates to £18 per month. More than 101 hours a month entitles you to £26 per month.
The benefit of this particular system of calculation is that it can save huge amounts of time. If you're busy and your expense calculations are the least of your worries, this can provide you with ample efficiency. However, you may end up getting less than you are entitled to as it is a less accurate method of cost calculation than comprehensively analysing the costs.
Analysing the costs more comprehensively is more complicated and time-consuming, but it is also more accurate. This strategy for claiming home office expenses will depend on the type of work you do at home as well as the kind of business you run and what you want to claim for.
You'll need to accurately attribute the amount of time you spend at home doing your work. If you're just starting up an consultancy firm, for example, and you are running all of your operations from home on a Monday to Friday, nine to five basis, the associated costs will be higher for you than someone who only occasionally works from home. You need to be able to balance out the costs associated with living and the costs associated with working.
To do this, you will need to ascertain which of the rooms within your home you use for work and how often you use them to operate your business. If you have an office space and you use it 50% of the time for actual work, you would calculate all of the costs associated with your work, multiply it by the fraction of the number of homes in your house - if you used one of the 5 rooms in your home this would be ? - and then by 50%. This would provide you with the accounts figure you require for your business use.
Need Advice With Home Office Expenses To Claim? Contact Keith Graham Chartered Accountants
Here at Keith Graham Chartered Accountants, we provide our services to both businesses and individuals to help them navigate tax and expenses issues. We cover absolutely every type of planning and forecasting that you will need to remain tax-efficient and have the most comprehensive foresight for your business and finances. Whether you require new business advice, auditing services, tax scheme advice or advice about which home office expenses you can claim, we are here to help.
To find out more about our services, please feel free to contact us today. We are available by email, telephone and via our quick and easy online contact form.