Claiming Expenses Whilst Working From Home
One of the benefits of being a limited company director is the ability to work more flexibly. If you find yourself working from home, the good news is that you may be able to claim back some of the costs.
To help you make the most of your money and understand what you could be entitled to claim back, we’ve put together a handy guide to help.
What expenses can I claim when working from home?
If you’re a limited company director, there are two ways of calculating your expenses when working from home: the flat rate amount or by submitting an enhanced use of home as office claim.
Here’s the difference between each option:
Flat rate expenses for limited companies
To keep things simple, you can opt to claim a flat rate expense for the use of your home office. This is currently £6 per week (as of April 2021) without the need for keeping receipts. This can be included as an allowable expense alongside anything else you’re claiming. Since HMRC doesn’t consider this to be a substantial enough amount, you won’t need to pay tax on this as long as your annual expenditure doesn’t exceed £312.
However, if you believe that the amount won’t be enough to cover your expenses, it may be advisable for you to consider an Enhanced Use of Home as Office claim.
Enhanced Use of Home as Office claim
If you are completing substantial fee earning from your home and incurring expenses in excess of the flat rate claim amount, you can submit an enhanced use of home as office claim. To work out the amount of your claim, you will need to calculate how much space in your home is occupied by business activities and the amount of time this space is dedicated solely to business use. To do this, you should first work out your total monthly outgoings for household bills, such as heating and electricity.
As an example, Sam works from home as a project manager, only visiting sites for meetings once per month. Her total heating and electricity bills amount to £200 per month. She has 6 rooms in her house and her home office takes up 1 room. For the month of March, she used her home office for business purposes for 19 out of 31 days. Her use of home as office claim for the month of March would be calculated as £200/6 = £33.33.
£33.33/31x19 = £20.43.
What expenses can I claim when I’m working from home?
You can also claim the following as allowable expenses:
Ordinarily, you will not be able to claim the cost of home broadband as it is not incurred wholly and exclusively for the purposes of your business, there is likely to be significant personal usage. The exception will be for incremental costs e.g. new cabling to your home office, if you can prove that the usage will be solely for business purposes.
Landline and mobile
If you make any calls from your personal landline or mobile for business purposes, you can claim the cost of any itemised phone calls made for business purposes. However, no portion of the line rental can be claimed.
In instances where a separate landline has been installed in your company’s name, or a separate mobile phone contract is taken out in the name of the business, solely for the purpose of your business, you can reclaim the cost in its entirety.
Home office furniture and equipment
If you are using a part of your home for business purposes, the rules state that you are able to claim the cost of office equipment and fixtures and fittings through your limited company. This includes stationery, furniture, technology such as computers and phones, and anything else which is used wholly and exclusively for the purpose of your business.
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