Working From Home – A Lowdown on Claimable Expenses is a boon for many people. There are around 5 million freelance workers in the UK who spend some or most of their working hours at home. Having the flexibility to look after a loved one along with productive work and avoiding the daily traffic snarls, is a dream come true for most people.
However, along with working from home, comes much nitty-gritty that one needs to look at which were earlier not under your purview as an employee. file the annual return for a freelancer is one of them. It is much more complicated and involves decisions to be made, unlike an employee tax return filing which has fixed heads of income and expenses.
Complexities in Working from Home
While your personal life certainly gets sorted, you need to focus on the Tax return preparation in a studious manner. Let us look at some claims allowed under the UK laws for a freelancer/independent consultant.
Overheads – Her Majesty’s Revenue and Customs allows claiming of various overheads and direct expenses in the return filing of home-based professional services.
- A weekly fixed expense of flat £4 per week (excluding business telephone calls) is allowed to claim without any receipts to be submitted from the company. All these details are outlined in the Employment Income Manual. Yet, these are sufficient for very small individual businesses but larger workgroups will require more limits. For higher expenses, receipts will be required.
- If certain utilities are not being used for personal use/dual-use (both home and business) but are specific to business use, they can be claimed. Extra costs of lighting, heating, business phone calls, dedicated business broadband services.
- In case the same connection of say, broadband is used by the business as is usually the case for freelancers, a certain percentage can be calculated which will reflect the number of hours the broadband is used for business purposes. A similar percentage can be used for a portion of the house used for business which requires heating, lighting and other facilities.
Rent, Mortgages – As these are personal expenses they cannot be clubbed under business expenses and no proportion of rent or mortgage can be shared with the business. See EIM32815 for more details. Rent can be charged to the business which will be disclosed in the annual self-assessment form.
Clothing – Interestingly, even specific work clothing required as a work from a home person can be claimed under the law.
While there are more details one can look at these will cover most of your home –office expenses.
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