Business Premises Costs – What can you claim?
Posted on 2nd July 2018
One of the most common questions I am asked my contractors and other small business owners is “I work from home; can I claim the costs of the rent?” In the blog post, I will explain what you need to consider and what you may be able to claim.
Whether you work from home or have separate dedicated business premises, you can claim the associated costs through the company and they will be tax deductible. The trick is knowing what you can claim and how to calculate it.
External business premises
Quite simply, if you rent office space, the company can cover the full costs of the rent, rates (if applicable), utilities and telephone/broadband connections. This applies equally to ad-hoc room rent or a full business lease.
Working from home
If you’re working from home, your company can repay you for some costs associated with running the business.
There are two options:
1. Basic Allowance
You can claim up to £4 per week (or £18 per month) without having to itemise or justify the costs to HMRC. This basic allowance is designed to acknowledge you writing up business notes, invoices and general ad-hoc administrative tasks at home.
2. Apportioned Cost
If you:-
• work from home at least one full day per week, and;
• have dedicated office space in your home,
you may be able to claim a proportion of your household bills.
The amount you can claim will depend on:
• Area: What proportion of the area of the house is used for business?
• Usage: How often do you use the area for business and how long for?
• Costs: What costs can you attribute or apportion to this business usage?
The costs you can apportion are:-
• mortgage interest (excluding repayment element),
• rent,
• water,
• gas and electricity.
You may also be able to claim a proportion of your landline and broadband costs.
If you choose to use the apportioned method, you’ll need to ensure you can prove that you have a functional workspace that’s used exclusively for business. You’ll also need to be able to provide evidence of your calculations to a HMRC inspector, if requested.
As always, seek the advice on an expert for any costs you wish to claim. We will be happy to help, just get in touch.
Written by:
Nicola J O'Sullivan -
Effective Accounting
Founder | Xero Champion | IR35 Expert
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