Claiming tax relief if you work from home

Small business owners are being urged to claim all the tax relief they are entitled to from HMRC. This will naturally include the growing number of freelancers and contractors who use their home as their main workplace.

Head of taxation at the ACCA, Chas Roy-Chowdhury, urged homeworkers to visit the HMRC website, which explains the benefits available to compensate individuals for expenses incurred while working from home.

Some of the typical expenses include:

  • The cost of business phone calls. You will need to split out the cost of any personal calls made, and if you’re on an all-inclusive package, you may find it hard to justify claiming back business costs as you would have incurred the cost regardless.
  • Any extra costs of utilities, such as electricity and gas usage for heating and lighting your dedicated work area. You will need to work out a proportion of the total bill costs based on the percentage of your residential area used for purely business purposes.
  • Using your car – tax relief is available according to the amount of business usage. You may also be able to make use of the 20% capital allowance to compensate you for the business use of your own vehicle.
  • You will be able to claim a whole range of further business expenses, either a simple deduction for things like stationery, or a deduction under the capital allowance rules for buying business equipment, for example.

Roy-Chowdhury said that tax relief is not available for domestic costs, such as mortgage payments (which would have to be paid for regardless), and there is a clear line between personal and business costs (a duality of purpose).

Further Information

You can claim a flat rate of £4 per week (or £18 per month) to go towards your costs of working from home – without the need to provide receipts (from April 2012 onwards). Of course, if you work from home on a regular basis, then you’re far better off making the claims mentioned above.

You should talk to your accountant if you have any questions about what you can and cannot claim for while working from home, as the rules are very complex.

For further information, visit HMRC’s guide on tax relief for employees working from home.

Last updated: 16th June 2019