Guidance on Home Expenses
Are you a contractor or running a business from home? Are you worried about your office expenses and wonder if you can claim for them against your self assessment tax return, well I have put together a small guide for fixed costs and on how to apportion the costs.
New guidance means that many contractors will now be able to claim against their income from contracting and working from home. Such fixed costs will include:
Insurance – if there is no separate business policy, a proportion of the household policy can be allowed
Council tax – a proportion of the total bill can be claimed.
Mortgage interest – A proportion of the mortgage interest is allowable, but capital repayments are excluded
Rent – A proportion of the rent of a home is allowable if a part of the property qualifies as being used for business purposes.
Repairs and maintenance – A proportion of the total cost of general repairs and maintenance can be claimed; this would include roof repairs, for example, but not decorating a room that is not used for business purposes.
HMRC will allow contractors to claim a proportion of costs against the contractor’s income if the right criteria are met. These include:
If an area of the home is used exclusively for business purposes and is in use during specific hours of the day. And the room used must look like an office, so have for example, a PC workstation, desk, chair and filing cabinets. Using a laptop at the kitchen table won’t qualify.
To calculate the proportion of your home that you use for the business purposes you can calculate by amount of rooms or by square feet. You can’t include the bathroom though! You also then need to take into account the amount of time you spend in the office. For instance if you spend 8 hours that’s a third of the day (8/24). So if your house has 4 rooms and one is used as your home office you calculate your expenses as 25% divided by 3 (25/3) although if you only work 5 days a week the calculation would need to be apportioned further as 5 divided by 7. Assuming a contractor meets these requirements, then a percentage of the total running cost of the home can be claimed.
For more information or to discuss your requirements please contact us on 07798 873077 (info@casa-office.co.uk)
New guidance means that many contractors will now be able to claim against their income from contracting and working from home. Such fixed costs will include:
Insurance – if there is no separate business policy, a proportion of the household policy can be allowed
Council tax – a proportion of the total bill can be claimed.
Mortgage interest – A proportion of the mortgage interest is allowable, but capital repayments are excluded
Rent – A proportion of the rent of a home is allowable if a part of the property qualifies as being used for business purposes.
Repairs and maintenance – A proportion of the total cost of general repairs and maintenance can be claimed; this would include roof repairs, for example, but not decorating a room that is not used for business purposes.
HMRC will allow contractors to claim a proportion of costs against the contractor’s income if the right criteria are met. These include:
If an area of the home is used exclusively for business purposes and is in use during specific hours of the day. And the room used must look like an office, so have for example, a PC workstation, desk, chair and filing cabinets. Using a laptop at the kitchen table won’t qualify.
To calculate the proportion of your home that you use for the business purposes you can calculate by amount of rooms or by square feet. You can’t include the bathroom though! You also then need to take into account the amount of time you spend in the office. For instance if you spend 8 hours that’s a third of the day (8/24). So if your house has 4 rooms and one is used as your home office you calculate your expenses as 25% divided by 3 (25/3) although if you only work 5 days a week the calculation would need to be apportioned further as 5 divided by 7. Assuming a contractor meets these requirements, then a percentage of the total running cost of the home can be claimed.
For more information or to discuss your requirements please contact us on 07798 873077 (info@casa-office.co.uk)