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While it is a complicated process, especially if you aren’t familiar with the regulations of HM Revenue & Customs (HMRC), when you are self employed as a sole trader you can actually make a claim for expenses while working from home.

There are two methods that may be used to calculate your expenses, and this can depend on the type of business you have and the number of hours you work from home each month.

Simplified expenses

Introduced by HMRC and coming into force back in April 2013, the simplified expenses method aims to streamline the process of making a claim. However, you should calculate whether this route is the most suitable for your business. The alternative is to claim actual expenditure, which involves working out the proportion of each bill that has been used for the business, rather than for personal use.

Flat rate expenses can be used by anyone who is self employed and living at the company address, covering business costs for vehicles and those who are self employed and working from home. If you are making a claim for working from your own home, you must keep a record of how many hours are actually worked from your residential premises. A flat rate is given by HMRC for a specified number of hours worked at your property. The amounts are:

• 25 to 50 hours is £10 per month
• 51 to 100 hours is £18 per month
• 101 and above is £26 per month

What if you work varying hours each month?

If you work a different number of hours every month, you use the amount given for the hours worked in each individual month. For instance, you may have worked 100 hours for three months and 26 hours for the remainder. You calculate three months at £18 and the remainder at £10.

If you work a considerable number of hours at your home, it may be financially beneficial to claim the actual costs incurred. To do this, you will have to keep an accurate record of expenses. You will need to work out how much of the house is used for business purposes. Electricity and gas bills will also need to be apportioned to accurately reflect the use for the company.

Keep a record of how much time you spend in the home dealing with your business. Both types of claim are made when you complete and submit your self assessment tax return.

About The Author

Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

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