Can I claim?
As a freelancer you are allowed to claim for your office utility bills, including when you work from home. Your utilities include: electricity, gas and water. What you need to understand, however, is the difference between the definitions of “Office” and “Use of Home as Office”.
HMRC’s meaning of ‘office’ applies to a space registered as your business headquarters. The second definition for tax return purposes is when your business is registered at your personal address.
In your tax return, you can only include expenses that are directly related to your business. However, if you use business assets, such as furniture, space, technology, etc., both personally and for business, you should work out the value of your personal use of those assets. Think about how much of the day is spent working with those assets. This is your percentage you can deduct from the total amount that would otherwise be for private use.
Using SimpleTax, you have three options you can discuss with us in order to make the most of your business turn-over:
- Self-Employed expenses: Office Space and Utilities – Electricity
- Self-Employed expenses: Use of Home as Office – Electricity
- Flat-rate of £4 a week (simplified expenses): Self-Employed expenses, use of Home as Office - Home as Office Allowance
To calculate the business use, for instance, if you use your home exclusively for business purposes during office hours, 9am-5pm, 5 days a week and assuming the generally accepted 5.6 week holiday for a full work year. This equates to a claim of 21% of business use on average for a home-based business.
There is also a flat rate for private use of business premises (e.g.: a B&B); this depends on how many people, including non-paying guests, use the business premises each month, or part month, as a private home. The flat rate does not cover mortgage interest, council tax or rates.
If you are not sure what is best for your business, our online accountancy system at SimpleTax can help you on the implications of the choices in relation to tax deductions available for your business.
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