Do you make the most out of claiming the use of home as office allowance?

When you are contracting or working from home, your home is deemed your principal place of business and therefore your company is able to contribute towards its running costs. This is known as the ‘use of home as office allowance’ which is provided for as an expense in the company’s annual accounts, thereby reducing its tax bill.

You do not need to have an allocated office within your home to claim this allowance.

There are 2 options available when deciding what the company can claim –

Option 1 – the standard claim

HMRC allow a standard £4 per week to be claimed and although using this method is quick and easy to calculate, the end result is that the company would pay more tax on this basis compared to assessing the actual home running costs.

Option 2 – apportionment based on the actual running costs

By assessing what the actual costs of running your home are and apportioning this total based on the number of rooms in the house, the claim you can make from the company is likely to be higher than the standard claim and will therefore save the company tax.

Examples of running costs to include in the calculation are mortgage interest (but not capital repayments), rent, insurance, light and heat and rates. Things like telephone bills are claimed separately.

We have a separate guide on what the calculation actually involves and this can be found here (along with many other useful guides!) – https://cleveraccountsltd.zendesk.com/hc/en-us/articles/200524677-Can-I-claim-for-use-of-my-home-if-I-work-from-home-

Copies of your bills must be retained when the non-standard allowance is used, just in case you are challenged.

Posted by John Hoskin