You can claim actual expenses for “Use of Home” if you undertake work for your business from home.
There is a simple method based on the average number of hours you work each month and receipts are not required. Alternatively, you can claim for the expenses you actually incur but this is quite complicated and you will need to keep receipts. I have a spreadsheet for this which you may find helpful.
The Revenue have issued simplified expenses rules which allow Directors/employees/the self-employed to claim a flat rate deduction in respect of use of home for business as an alternative method to recording actual expenditure and apportioning the business element. Click here for the link.
The monthly flat rate includes all household running costs, such as heat, light, power, home telephone and broadband/internet costs.
The rates are as follows:
Number of hours worked Flat rate
Per month Per month
25 or more £10
51 or more £18
101 or more £26
The formula is below but it will be less painful working through the example or using the spreadsheet.
Firstly, decided what space is used wholly for the business and then partly for the business as a proportion of the total space. Next, add up all the household expenses which relate, in part, to the business. You must pay these (i.e. not your spouse, partner or parent).
This total is firstly discounted by the part used wholly for the business/total area. To this is added the total x (part used partially for the business/total area) x hours used for the business/total hours used. As I said it is complicated but I do have a spreadsheet which can help.
Let’s work through an example.
A has a 3-bedroom, 2 reception house of which 1 bedroom is used wholly for the business and a reception is then used to meet clients for 1 hour out of its total usage of 12 hours per day.
|Mortgage interest (not capital repayments)||1500|
|Light and heat||300|
|Repairs and maintenance||500|
Part used wholly – total is £3,150 x 1/5 = 630
Part used partially – total is £3,150 x 1/5 x 1/12 = 53
So, the “Use of Home” claim will be £683. Consider this method if your rental or mortgage interest payments are high.
You can also claim for specific expenses such as a dedicated business line, office furniture and equipment. Redecoration or security expenses of a room used for the business can be claim again discounted for the private element as appropriate.
If you trade through a limited company ensure telephone, internet and mobile phone contracts are in the company name. If they are in your own name then these should be discounted for personal used and there is a benefit in kind for P11d purposes on which National Insurance is payable.
Where part of your home is used “exclusively” for business purposes then you are not entitled to claim the Capital Gains Tax (CGT) Private Residence Relief (PRR) on that part of the gain relating to the business part. In most cases there will be at least incidental personal use.
Published 13 September 2017.
Updated 15 October 2017.