what portion of my utility bills can I claim when working from home?

[NickToye]

I am going to be working from home and I have been led to believe that you can claim a fifth (depending on the rooms in your house) off your household bills and put them through the business accounts. I have 5 rooms, so I am able to put a 5th of the following:

Rent
C.Tax
Elec/Gas/Water
House Insurance

through my business accounts. Is that right?

[James Smith]

Nick,

Its very much an "it depends" type question, but yes you can in a general sense claim a reasonable proportion of you household bills for tax purposes if you have a home office and therefore use your house partly for business purposes.

There are different rules for employees, limited companies and sole traders as each come under different tax headings, but you are along the right lines for a sole trader although you need to consider not only the number of rooms but the floor space and time spent working. You also need to consider which costs are fixed and which are variable with your working which can lead to a different result. All in all its a pretty mucky area which tends to end in a "what feels right" type answer rather than anything else.

Regards,

[NickToye]

Nick,

Its very much an "it depends" type question, but yes you can in a general sense claim a reasonable proportion of you household bills for tax purposes if you have a home office and therefore use your house partly for business purposes.

There are different rules for employees, limited companies and sole traders as each come under different tax headings, but you are along the right lines for a sole trader although you need to consider not only the number of rooms but the floor space and time spent working. You also need to consider which costs are fixed and which are variable with your working which can lead to a different result. All in all its a pretty mucky area which tends to end in a "what feels right" type answer rather than anything else.

Regards,

So there is no wrong or right?

[Indizine]

I've edited the title to better reflect the post question.

[openmind]

So there is no wrong or right?

Not really but then that's where the services of a decent accountant like our James pay dividends (no pun intended )

The majority of accountants are on your side working to ensure you pay the not just the correct amount of tax but also that you don't overpay.

[James Smith]

So there is no wrong or right?

Heh, there is a lot of interpretation in this area as its based on guidance notes from HMRC (and there are a huge number of examples) and case law rather than specific legislation. There is certainly a lot of "wrong" but "right" is not a single figure but a range.

Some of the HMRC guidance is here on this topic,as applied to SELF EMPLOYED** persons:

http://www.hmrc.gov.uk/MANUALS/bimmanual/BIM47815.htm

**If you are limited company or an employee, don't look at this it will contradict what your accountant is telling you you can claim (!)

[NickToye]

Heh, there is a lot of interpretation in this area as its based on guidance notes from HMRC (and there are a huge number of examples) and case law rather than specific legislation. There is certainly a lot of "wrong" but "right" is not a single figure but a range.

Some of the HMRC guidance is here on this topic,as applied to SELF EMPLOYED** persons:



**If you are limited company or an employee, don't look at this it will contradict what your accountant is telling you you can claim (!)

Thanks this is very useful.

[The Broker]

Without looking at the link I think it is 25% as long as you can prove you are using office space etc