Working remotely is one of the benefits of being self-employed. You must be familiar with the HRMC’s rules for using the Home Office Tax deduction.

How Much Does HMRC Charge For A Home Office?

Calculating simplified expenses for business: Example

For 10 months in 2018, you worked at home for 150 hours a week. But, for November and Dec, you only worked 40 hours a month. ).

Also, PS30 per Month was charged for a fixed-line and broadband package.

This means that for 10 months where you worked 150 hours a month, you could deduct PS26 a month. For the two months, you worked 40 hours a year, you would subtract PS10 per calendar month.

Thus, (26×10 + (10×2) would result in you deducting PS280.

To subtract the cost of your broadband and phone packages, you need to find the percentage of use by businesses.

In 2016/17, you worked 1580 (150 hours multiplied by 10 months plus 40 for two months). A normal year has 8760 hours (24 hours multiplied times 365 days). Your percentage of business use equals 1580/8760 multiplied by 100. This is 18%.

This means that you can deduct 18% from your broadband bill per year. (PS30x12 / 18%), which is PS65.

Is It Possible To Deduct The Actual Cost Of My Home Office?

HMRC has no formula or exact method to solve this problem. You must divide your costs equally between business and personal use. 

You can divide your total expenses by the number of rooms that you use for business. This is the most common method. Add this number to the percentage of business time you are using the room.

Keeping detailed records of your expenses is extremely important. This will make it much easier to calculate your home/office deduction. HMRC may ask for your records to ensure that your claim is correct.

How Can You Include Expenses From My Home Office In My Deductions?

HMRC allows two types of costs to be deducted from your deductions: fixed costs, and running costs.

Fixed Costs that you can deduct from your taxes are:

  • Rent
  • The interest on your mortgage. However, you cannot deduct part or all of the capital repayments.
  • Council Tax
  • Insurance (unless you have separate coverage for your business)
  • Repairs and maintenance

There are several running costs that you can deduct from taxes.

  • Heating, lighting, electricity
  • Water and sewerage
  • Phone and broadband
  • Cleaning

Can You Subtract Office Furniture And Office Supplies From Taxes?

Yes, you can. These items would not be considered in the calculation of your home as an office.

HMRC considers office furniture and equipment needed for work to be plants and machinery. This furniture is eligible for the annual capital allowance. This means that you can deduct the amount you paid for it, less any personal usage, from your taxes up to PS25, 000 per year.

Let’s say that you bought a desk at PS300. You use the desk for work 90 percent and personal use 10 percent. PS300 is 90 percent of your tax deduction, which is PS270.

Also, office supplies such as pencils and paper can be deducted as an expense.

To prove this, you must show that the envelopes were used solely for business purposes. If you use the same envelopes to send birthday greetings to your friends and business, you cannot deduct them.