Working From Home? You Could Be Leaving Money Unclaimed

Self-employed people have two ways to claim home working costs. The flat rate saves time. The actual cost method can claim more. Compare both before you file.

Method 1: The Simplified Flat Rate

HMRC sets a fixed monthly amount based on the hours you work from home. You do not calculate a share of your household bills.

25 to 50 hours a month: £10 per month
51 to 100 hours a month: £18 per month
101 or more hours a month: £26 per month

You need at least 25 hours a month to use this method. Claim the correct rate for each month, not an average.

The flat rate covers your heating, lighting and power. It does not cover phone or internet costs. You claim the business share of those separately.

Method 2: The Actual Cost Method

Here you claim the business share of your real home running costs. These include gas, electricity and water. You also claim the business share of your phone and broadband.

You work out the share using a fair basis, such as the rooms and hours you use for work. Keep your bills and your workings in case HMRC asks.

Which Method Pays More?

The flat rate tops out at £312 a year. If you work from home full time, your actual costs may exceed that. Energy bills, a dedicated office room and higher broadband use all push your claim up.

If you work from home only a few days a month, the flat rate may suit you better. It needs less record-keeping and carries less risk of error.

Run both calculations. Then use the method that gives you the better result, once you have weighed up the extra admin.

Who This Applies To

Simplified expenses are for sole traders and partnerships made up of individuals. Limited company directors and employees follow different rules. Check which applies to you before you claim.

A Quick Word of Caution

This is general information, not personal tax advice. Your best method depends on your hours, your bills and how you use your home. Speak to your accountant before you file.

Source: GOV.UK: Simplified expenses if you're self-employed, working from home

📺 Watch the full breakdown on Instagram: https://www.instagram.com/p/Dd_z3CBAS8i/

Save this now, before your next tax return.

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