So you’re good at this Self-Assessment thing. You’ve stored every invoice, receipt, bill and statement in colour coded folders that are organised by month. You know exactly what you’re doing; you just have to put the numbers in the right places. Simple!
But you work from home – and that can make things complicated.
The Cost of Working from Home
You primarily work from home; sometimes in your office, sometimes not. Some days, you want a change of scenery, so you take your laptop to the coffee shop. Or the library. A couple of days a month, you work for a client who likes you to sit in their office and use their computers to complete their project.
How on earth, then, can you work out accurately what proportion of your household bills are incurred as a result of your work? How much should you claim? What if HMRC quibble about the amount you’ve claimed? Before you drag out every utility bill you’ve received in the last year and start frantically jabbing at the calculator, there may be a far easier solution; simplified expenses.
The Flat Rate, No Fuss Solution
The Simplified Expenses Checker can tell you if using flat rates will work best for you, and you can also seek the advice of your accountant – however, if they’re completing your tax return, they will already be claiming your expenses in the way that’s most beneficial to you. If your home is very expensive to heat or your work involves substantial use of electricity, for instance, then it may be better to calculate the exact costs.
Simplified expenses cannot only be used for calculating the cost of working from home (where the main use of the premises is as a home, but you work there too), but also for use of a vehicle for business and living at your business premises (main purpose is business, but you live there too).
Using the flat rates for the expenses you incur from working at home can make the completion of your tax return – and your bookkeeping in general – much easier. The amounts are only intended to represent your utility bills, though; it will still be up to you to calculate any other costs you have, including the use of your landline, mobile phone and internet.
To use these simplified rates, all you need to do is to estimate the number of hours you spend working from home every month. The current rates you can claim are:
25-50 hours per month: £10 per month
51-100 hours per month: £18 per month
101 hours and more: £26 per month
If you use a vehicle for business purposes, and have not claimed capital allowances for it, you may be able to use these flat rate per mile rates for your vehicle use, and if you live at your business premises you may be able to use these rates that are calculated on the number of people living at the premises and are still applicable even if you live alone.
If simplified expenses suit your circumstances, then it’s one less thing to worry about and one less set of records to keep. And your calculator will be glad of the break, too!