What can the self-employed claim when working from home?

The self-employed, for example, partners in partnerships or sole traders of unincorporated businesses, can make claims for costs that they incur, which can reduce their taxable profits. In some respects, it is easier to make a claim if you are self-employed, as to claim an expense you only need to demonstrate that the expenses are wholly and exclusively incurred for your business, as opposed to an employee that has to satisfy the wholly, exclusively and necessarily criteria for an expense.

Therefore, any running costs in relation to providing IT support, such as mobile phone, home phone, broadband, can be claimed, albeit for a self-employed individual it must be restricted for any private use. Any equipment that you buy for your home office is also an allowable deduction through a claim for capital allowances, but again, a private use restriction is required if the office is used for other activities.

In respect of the general running costs of a household, this is often referred to as a claim for ‘use of home as office’. HMRC has a flat rate scheme that you can claim based upon the number of hours you work in a month. These are as follows:

Reviewing your arrangements – consistency is key

Many practices already make a claim for use of home as an office to reflect the fact that most owners will work at home during the year. However the current unprecedented levels of working from home, means that that allowance can probably be reviewed and increased to reflect the additional time. This may be for many over 101 hours per month!

Alternatively, individuals can work on the basis of the costs of running that office at home as this can work out to be a higher claim than the flat rate scheme. It is a slightly more complicated calculation based upon the running costs of that room that is used for the office in comparison to the rest of the house, but it is important to note that the costs would only include the normal utility costs plus the mortgage interest and not the capital repayment element of the mortgage. Again, given the additional time spent working at home at the moment, these calculations should be reviewed.

Whichever route you choose to use, it is important that it is consistently applied year on year.

The change in working patterns gives owners of a law firm to check that they are claiming the appropriate expenses for the costs that they incur themselves whilst working from home, in order to mitigate their tax liabilities.