Working from home is harder than it looks, no matter what everyone says about you putting your feet up or doing work in your pyjamas.
Managing your accounts and expenses when you don’t have the traditional set up of a company with a formal office can be a little trickier than most people imagine when they go down this route.
Luckily, we’re here to help you understand what expenses you can claim for to reduce your tax bill.
Good news for bill payers, you can claim for part of your energy bills. After all, you need electricity to power that computer and gas for essential central heating to take you through the winter months working from home.
While paying for the internet might seem like a personal cost of everyday living, if you’re using it to conduct business you could claim part of the costs as an expense. Try a website tracking tool which will help you work out how much of your usage is business-related.
You may be able to claim a proportion of your rent or mortgage interest as a business expense if you work from home. Some repairs and maintenance costs might even be allowed but they must be expenses related to the business e.g. not a kitchen renovation.
If you use your phone for contacting clients you may be able to claim for your phone bill or the cost of buying a handset (as long as it’s for business purposes).
Marketing and PR
For those who hire help with marketing or spend money on advertising, you can claim these costs as business expenses because they’re vital to you operating your business.
While driving to and from an office or place of work isn’t usually a business expense, if you spend time travelling to and from client offices in order to conduct business, you could claim your vehicle costs and petrol as a business expense.
Equipment and office costs
You can claim for equipment such as a computer, printer, and stationery as they all contribute to your ability to conduct business. You can also claim for specialist equipment such as camera if you’re a photographer, for example.
Many of these household bills are tricky to note down but are definitely worth claiming for in order to reduce your tax bill.
However, they must be worked out proportionally to your business usage. So you won’t be able to claim all of your household bills as an expense because you would have been paying most of them whether you had a business or not. But you will be able to claim for a portion of them.
So, for example, if you have a home office, you can divide your bills by how ever many rooms in your home there are and claim for that percentage. To do this, you need to have the office used solely for the purpose of business.
There are other ways to work out the proportional costs such as time spent working in the week. The best option will depend on your personal circumstances so it’s always worth getting specialised advice from an accountant.