You can claim on gas, electricity, water bills, council tax, and internet and telephone bills.

If you’re a sole trader, you might be wondering what expenses you can claim when working from home. Here’s a quick guide to help you out.

First, remember that any costs incurred in running your business are tax-deductible. This includes things like office supplies, telephone and internet costs, and travel expenses related to your business. 

Second, if you’re using a room in your home exclusively for business purposes, you may be able to claim a deduction for part of your mortgage or rent payments, as well as utilities and insurance. 

This will keep your tax bill down and get you back some money that you can either reinvest or use as a treat.

Allowable expenses

Expenses that business owners can use to offset their tax bill are known as ‘allowable expenses’ and include anything that is purchased “wholly and exclusively” for the purpose of the business.

That could include simple office equipment, a work laptop, training materials, stock and accountancy fees. 

We cannot understate the importance of only using these expenses only for business purposes, as if HMRC discovers you have benefitted from them personally, they won’t count as an allowable expense. 

In the case of expenses that are particularly difficult to match this rule, such as internet and telephone bills, you can deduct the portion of the cost you spent for business purposes. 

For vehicle expenses, you can use the ‘simplified expenses’ system, which sees you calculate your expenses by using a flat rate for mileage instead of the actual costs of buying and running a vehicle.

Expenses of running a home office

The main type of business expenses relate to the increased utility bills you will likely see when you work from home.

After all, you will be using more electricity, heating and internet than you usually would.

However, people working from home can claim for a percentage of their utility costs, including gas and electricity costs, as well as telephone and internet bills – you can even claim for a portion of your water bill.

Just like vehicle expenses, there are two main ways you can calculate your expenses.

First, you could work out the proportion of personal and business use for your home. In fact, you have to do this if you want to claim for your telephone and internet expenses.

Alternatively, you can use simplified expenses if you work for 25 hours or more a month from your home.

The flat rate you pay is related to the hours you work at home per month as follows: 

Hours of business use per month Flat rate per month
25 to 50 £10
51 to 100 £18
101 and more £26

You can use the simplified expenses checker to compare what you claim using simplified expenses with what you might be able to claim by working out the actual costs.

Talk to us about expenses related to working from home.