Can I claim for use of my home if I work from home?

There are two ways to claim the use of a home allowance when you work from home.

Low hassle, tax-free payment

HMRC will not charge you tax if you claim £312 per year (£6 per week) as a use of home allowance.  This allowance would cover household expenses for working from home. Up to 31st March 2020, the rate was £208 per year (£4 per week) so if your accounting year spans this date, it will need to be claimed at the two rates. 

More hassle, but better allowance

You can personally charge rent to the company for the office space it uses.  A general rule of thumb calculation would be a good guide:

1. Take the mortgage interest or rent, and all other household expenses (heat and light, rates, water) and work out your annual cost.
2. Count the number of rooms you have in the house (excluding your kitchen and bathroom).
3. Take the number of rooms you use for the business - you may use just one room as an office.
4. Take the number of rooms you use as an office against the total number of rooms as a percentage.
5. Use this percentage of the total cost of the household expenditure.

So an example would be:

1. You currently pay £10,500 for mortgage interest, electricity, heat and light.
2. You have 6 rooms in your house.
3. You use 1 room for your office.
4. Take £10,500 * 1/6 = £1,750 that you can claim for rental.

Mortgage Interest

Only the mortgage interest is claimable, not the mortgage repayment. Your mortgage provider will be able to provide you with details of the interest charged throughout the year.

 

What you need to do

Provide your dedicated accountant with details of the above at the year-end and we can work out what is owed to you. It may be more beneficial to calculate throughout the year and pay a fixed amount, however, a calculation will need to be done at the end of the year, based on the exact costs incurred.