Call for Assistance: 02033 259 341
Spondoo Accounting
Call for Assistance: 02033 259 341
Spondoo Accounting

Working from Home Allowance Calculator – Self-employed individuals

May 27, 2021

Claiming a Work from Home Allowance if you are Self Employed 

If you are a self-employed person working from home, there are different work-related business expenses that you can claim. HMRC allow you to charge your ‘work from home’ costs to your business and claim tax relief on them.   

There are two methods of calculating your claim – the simplified expenses method OR calculate the Full Cost and calculate the claim’s proportion.  

Simplified expenses

You can calculate your allowable expenses using a flat rate based on the hours you work from home each month. However, you can only use simplified expenses if you work for 25 hours or more a month from home. These are the flat rates provided by HMRC based on the number of hours worked from home each month: 

Hours of business use per monthFlat rate per month
25 to 50 £10 
51 to 100 £18 
101 and more £26 

 

You do not need to provide any records of the household expenses you’re claiming relief for when using the flat rate.  

Even though the ‘simplified method’ is the easiest and quickest way to calculate your allowance, you can miss out on taking advantage of some of your tax relief. 

Calculating the full cost

When using this method to claim home office expenses, you can deduct some business costs to work out your taxable profit if they are allowable expenses. In that case, you must take your time to calculate each cost and claim a percentage of the actual costs.  

You may claim a higher sum if your actual costs are higher than the flat rate. In that case, you must prove to HMRC that by way of a ‘fair and reasonable’ calculation: 

  • Your actual costs are no more than the additional household expenses you have incurred. 
  • You paid these costs yourself – they are not paid by a partner or spouse. You will need supporting evidence when claiming the higher sum. 

This method is more complicated – you will need the help of an accountant who will help you increase the amount claimed and reduce the tax bill incurred. 

What expenses can I claim when working from home as self-employed?  

Self-employed allowable expenses are ‘wholly and exclusively business-related’. They do not include money taken from your business to pay for private purchases.  

You can claim: 

  • Utility bills gas, heat, power expenses, electricity (not water unless used for business purposes)  
  • Council tax  
  • ISP/broadband costs 
  • Household insurance  
  • Telephone line rental  
  • Stationery – paper, pens, business cards, envelopes, pencils, and staples.  
  • Printer toner and ink – claim back a proportion of the cost of toner or ink used for business documents you print. 
  • Property repairs – if the repair affects the area of the house you use for working from home.  
  • Mortgage interest or rent on your home (Capital repayments are not allowed) 
  • Invoiced household cleaning costs (excluded if you pay cash wages with no receipt to a cleaner) 

You may also charge these home office costs (when used exclusively on the home office) to your business: 

  • Business equipment repairs 
  • A second business line if incurred for business purposes 
  • Business insurance – if business use is covered by a separate policy, the cost of that policy is allowed in full. 
  • Office cleaning  
  • Office repairs and maintenance. 
  • 100% of itemised business calls made on your home telephone 

It is important to bear in mind that the flat rate does not include telephone or internet expenses. You can claim the business proportion of these bills by working out the actual costs. 

Unclaimable expenses when working from home 

You cannot claim personal expenses for things that you use privately. If you use something for business and personal reasons, you can only claim allowable expenses for the business costs. 

You cannot claim – expenses paid by a partner or spouse, personal phone calls costs, and expenses that do not have receipts. 

Calculate my working-from-home tax expenses 

The amount you can claim for utility bills depends on: 

  • How much of your house you use to work. 
  • How many hours per day you use that space.  

Please use our calculator to get your work from home allowance. 

How to claim Working from Home expenses 

As a self-employed business owner, you must keep records of your business transactions.  

To claim your expenses, add up all your allowable expenses for the tax year and put the total amount on your Self-Assessment tax return. Even though you do not need to send in proof of costs incurred when you submit your tax return, you should keep the records to show them to HM Revenue and Customs (HMRC) if asked. 

Calculate my Working from Home Allowance now! 

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Information provided on the site is merely guidance that may change in line with UK law and regulations. Users must not consider this to be financial advice or their sole resource when making any financial decision. Spondoo is a trading name for Accounting SQL Limited, authorised & license accounting firm under the Institute of Financial Accountants.

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