Use of home as an office: Calculator

What costs can I claim when working from home? How do I calculate my claim? What restrictions should I apply? 

This is a freeview 'At a glance' guide to use of home as office claims. 

At a glance

This is designed for use by a self-employed person in order to calculate how much to claim as a tax-deductible expense for working from home.

Warning: 

1. Each expense claim will be different and each claim must be based on actual business practice.
2. This calculation requires a high degree of common sense combined with use-of-judgement and an understanding of both the type of business conducted and the tax rules.
3. It is recommended that you read Working from home (self-employed) in conjunction with this kit.
4. Tax penalties will apply in the event of Carelessness.
5. Always try to retain evidence of proof of expenditure incurred (bills paid etc).

Expenses may be apportioned on a different basis.This toolkit calculates expenses on the basis of a number of rooms and hours. A different or perhaps a more accurate calculation may create a different result when taking into account actual usage and other factors as considered in the guide Working from home (self-employed). Use of rooms as a basis of apportionment may give you a skewed result if your office is small and other rooms large.

Small businesses may alternatively claim a fixed-rate deduction since April 2013.

Calculation

Step 1 working hours

Fact find:

• What type of work do you do?
• Is the business based at your home?
• Do you do work elsewhere?
• Does the business occupy other premises?
• Do you employ any employees?
• Do they also work at your home?

Considering the responses to the above questions: for how many hours is your home actively used for work per day?

• If you also work away from home, how many hours do you work away from home per day? It is useful to know this so that you don't overclaim home use.

Step 1 total	Total hours
For how many hours is your home used for your business each day?

Step 2 working rooms

Fact find

• How many rooms are there in your house?
• How many rooms do you use Wholly and Exclusively for work?
• Do you use these rooms for private purposes during the evening or weekends?
• How many rooms do you use partly for work and partly for private use?
• Do you use any rooms for wholly or exclusively for work storage?

Step 2 totals	Number
A. How many rooms are there in your house?
B. How many rooms do you use wholly & exclusively for your business?
C. How many rooms have dual business/private use?

 

Step 3 working out your costs

Add up your costs:

Fixed costs	£
Mortgage interest or rent
Council tax
Water rates
Insurance
Broadband
Total
Variable costs	£
Electricity
Gas
Repairs and maintenance*
Cleaning
Total

 

Calculation

Full-time workers

If your total at Step 1 is more than seven hours (assuming that you work from home full-time).

Take the combined totals from Step 3 and divide by Step 2A, then multiply by (2B + 1/2 x 2C).

Where you are also using rooms privately, say at weekends or in the evening, you should consider restricting the claim proportionately.

Part-timers

If you are not working full time from home you may need to restrict your claim if you are not using rooms wholly or exclusively for the business. This calculation time apportions the claim over 24 hours. It may be more beneficial to work out usage on an expense by expense basis, see Working from home (self-employed).

If your total at Step 1 is less than seven hours:

Take the combined totals from Step 3 and divide by Step 2A, then multiply by (2B + (1/2 x 2C)). Multiply the result by your total hours at Step 1 and divide by 24.

Note on expenses

Telephone costs are not included in this calculation as it is assumed that the business would either support a dedicated phone line or that any claim for the use of a private phone will be claimed separately based on actual use.

* Repairs & renewals

You need to take a view as to whether repairs and renewals are included in this calculation. For example, if you refurbish your kitchen, sitting room/drawing room and bedrooms, which are all rooms which we normally expect to be used primarily for private use, the objective in refurbishing may well be to make your home more pleasant and there is a duality of purpose and no tax relief is allowed. Not even a proportion of the cost is likely to be accepted by HMRC or a Tribunal. If you refurbish the room you are using as an office or workshop if the objective is to smarten up your workplace, make it habitable for work, make it presentable for clients, it is unlikely that anyone will object to a claim for part or all of the cost.

The cost of something like re-roofing your home is very likely to be disallowed due to duality of purpose. 

Minor use of home

According to its manuals, HMRC will not challenge reasonable claims when there is minor use of home.

Prior to April 2013, it seemed reasonable to assume that rather than attempt a calculation, HMRC would allow at least the same allowance that HMRC allows employees who are homeworking. This amounted to £4 per week from 2012/13 and £6 per week from April 2020. This is non-statutory.

Flat rate/fixed rate claim

You may claim a fixed rate for use of your home from April 2013. The rate applicable is based on your calculation of the number of hours that you work at any homes 'wholly and exclusively' for the purposes of the trade.

No of hours worked per month	Amount per month
25 to 50	£10
51 to 100	£18
101 +	£26

 

See our Flat rate expenses or actual cost toolkit. 

Companies and directors

Different rules apply to home-working directors and employees. A director is more likely to be able to charge rent and there may be some additional issues and complications by virtue of their office.

See Directors: Working from home and Working from home: employer/employee