If you are self-employed and run your business from home, you can claim a proportion of your household expenses such as council tax, water rates, lighting and heating, rent or mortgage interest and certain repairs. If for example your house has six rooms, excluding the kitchen and bathroom, and you use one room partly for business, you may be able to claim up to one sixth of your household expenses against your business income.
There are various ways in which home running costs can be apportioned, depending on how you run your business. HMRC have several examples in their business income manual to illustrate how you could calculate this.
Is there an easier way to calculate the business element of my household expenses?
In a word yes. You can use the HMRC simplified expenses which allow you to claim a flat rate based on the number of hours that you work at home, instead of doing the calculations above.
You can only use the simplified expenses if you work at least 25 hours per month from home, so it may not be the right option for everyone. If you want to use the HMRC simplified expenses flat rates the amount that you can claim are as follows:
Hours business use per month | Flat rate |
25 to 50 | £10 |
51 to 100 | £18 |
101 or more | £26 |
The flat rate allowances are relatively modest and may result in a smaller claim than if you apportioned your actual household expenses. However, the flat rates above are easier to calculate and do not require you to keep detailed receipts of your household expenses.