Use of your home as an office

7 years, 9 months ago by Gregory Atkinson

You can claim a reasonable amount for using a room or rooms at home for business purposes, based on apportioning actual expenses. For more information than is provided in this article, please get in touch with our accountants in Hove.

Fixed Costs

These costs relate to the whole of the house, but if part of the home is set aside solely for trade use for a specific period, then a part of these costs is allowable. It will normally be appropriate to apportion these expenses by area and time.

• Insurance – only allowable if the trade is not covered by a separate policy.
• Council Tax
• Mortgage Interest – NOT repayments of capital
• Rent
• Repairs & Maintenance – a proportion of general repairs such as exterior redecoration or roof repairs is allowable. Redecorating a room solely used for trade purposes is wholly allowable whereas repairs that relate solely to part of the house not used for the trade are not allowable.

Running Costs

Where there is significant trade use at home the following expenses can be apportioned by reference to their usage in the business. Otherwise a reasonable proportion of use may be used.

• Cleaning
• Heat, Light & Power – the proportion used should reflect the facts of usage such as amount of power used by electrical devices in the trade.
• Telephone – Cost of business calls is allowable along with a proportion of line rental
• Broadband – Proportion used should be based on the extent that the connection is used for trade
• Water

Flat Rate Alternative

An alternative is to claim a flat rate deduction:

• £10 a month for 25 hours to 50 hours working from home
• £18 a month for over 50 hours to 100 hours
• £26 a month for over 100 hours

The flat rate covers all household goods and services, food and drink and utility bills, but not mortgage interest, rent, council tax or rates.

Capital Gains Tax Issue

When you come to sell your property the profit made could attract Capital Gains Tax as the private residence exemption could be reduced by you using part of the house exclusively for work. This can be avoided by making sure that the part of the house used for work is also used for non-business purposes. For example using the office for personal filing or using the computer for personal use as well.