Are you self-employed and running your business from home?

You can claim some of the costs of running your business from home. These costs include:

• Heating
• Electricity
• Mortgage interest or rent
• Rates

Add up these costs for the year and assuming the rooms are of equal size then divide the total by the number of rooms. If the rooms are not of equal size you will need to work out a formula, maybe on floor area. This will give the cost of allowable expenditure you can deduct from your profits.

Is there a downside?

The answer is yes. When you come to sell your house then that room would not count towards your principle private residence relief (tax free amount) and will be subject to capital gains tax. However, the increase (gain) in value of that part of the house would need to be time apportioned for the period you claimed the ‘use of home’ expenditure. You would then be able to claim the capital gains yearly allowance against this gain. It is only if the gain is greater than this allowance you would have a capital gains tax liability.

Is there another way?

Again, the answer is yes. You could claim the HMRC fixed rate expenditure for use of home and the amount would depend on how many hours you worked from home per month, as shown in the table below:

Hours of business use per month

Flat rate per month

25 to 50


51 to 100


101 and more


The maximum claim being £312.

You can only use this method if you work more than 25 hours per month from home.

To find out more on this, or if there is anything else we can help you with, please give us a call today on 01245 326280