{"id":148468,"date":"2025-03-21T21:34:02","date_gmt":"2025-03-21T21:34:02","guid":{"rendered":"https:\/\/peraltafinancing.com\/accounting\/the-kashflow-guide-to-working-from-home\/"},"modified":"2025-03-21T21:34:02","modified_gmt":"2025-03-21T21:34:02","slug":"the-kashflow-guide-to-working-from-home","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=148468","title":{"rendered":"The KashFlow Guide to Working from Home"},"content":{"rendered":"


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One of the best ways to keep overheads down in the early days of running a business is to work from home. But did you know you can save some more money by claiming tax relief?<\/p>\n

It\u2019s true! HMRC allow you to claim tax relief for home expenses if you run your own business from home. The trick is to make sure you use a \u201creasonable\u201d method to calculate your expenses \u2013 one that we cover in this blog\u2026<\/p>\n

There are a few steps involved in working out your home expenses.<\/p>\n

Step one<\/strong><\/p>\n

The first one is to work out how many rooms you have. HMRC class any \u201cnormal living space\u201d as a room, so this normally excludes bathrooms and hallways. Bedrooms, your living room, kitchen and dining room (if you have one) would count.<\/p>\n

Note that if you have a room that\u2019s dedicated entirely for business use, then you\u2019ll have to pay Capital Gains Tax on that room when you sell your home. So if you have an office room in your house, try using it for something else too \u2013 like a games room or a workshop.<\/p>\n

Step two<\/strong><\/p>\n

You need to calculate the \u201cpercentage of use\u201d for each room. This is the amount of time you work in each room. So for example, if you work in your office for 8 hours a day and spend 2 hours playing video games in there \u2013 then your percentage of use will be 80%.<\/p>\n

You\u2019ll have to do this for each room you work in so, for example, let\u2019s say you make and sell cakes. You\u2019ll spend 6 hours in the kitchen making and decorating cakes, and another 4 hours in your home office doing admin. (Note: you could be spending less time on your admin by using accounting software like KashFlow \u2013 take a look<\/a>).<\/p>\n

On top of this, you spend another 2 hours in the kitchen doing your own cooking and 1 hour in the office recreationally.<\/p>\n

So your percentage of use would be: 6 working hours out of 8 in the kitchen = 75%. 4 working hours out of 5 in the office = 80%. We\u2019ll use these again in a moment.<\/p>\n

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Step three<\/strong><\/p>\n

Now, you need to get each bill and evenly divide the total by the number of rooms.<\/p>\n

The most common costs you can include are heating, electricity, rent, council tax, repairs and cleaning bills (for the whole house), home insurance (if it also covers your business) and the interest on mortgage payments (but not the capital).<\/p>\n

When it comes to broadband and phone lines, you\u2019ll need to calculate the percentage of costs based on volume of business use. Unfortunately, you can only claim to costs of calls or use, not the line rental costs (unless you can prove you only installed internet or a phone line so that you could work from home).<\/p>\n

So say your total in rent and applicable bills is \u00a3500 per month and you have 5 normal living spaces (2 bedrooms, an office, a kitchen and the living room). This would work out at \u00a3100 per room.<\/p>\n

Step four<\/strong><\/p>\n

Now bring these numbers together using the calculation \u201croom cost x work use\u201d.<\/p>\n

So our cake maker from earlier would be spending \u00a375 in the kitchen (\u00a3100 x 75%) and \u00a380 in the office (\u00a3100 x 80%).<\/p>\n

Add these together to find your total business usage cost and the amount you can claim in working from home expenses. Our cake maker can claim \u00a3155 \u2013 not bad!<\/p>\n

If you got a bit lost in those calculations, or don\u2019t fancy working it out every month, HMRC offer a simpler way of calculating you working from home expenses.<\/p>\n

They offer a flat rate calculation with a fixed amount, which varies depending on the number of hours you work from home per month.<\/p>\n\n\n\n\n\n\n
Average number of hours spent working from home per month<\/strong><\/td>\nAmount of tax relief you can claim per month<\/strong><\/td>\n<\/tr>\n
25 \u2013 50<\/td>\n\u00a310<\/td>\n<\/tr>\n
51 \u2013 100<\/td>\n\u00a318<\/td>\n<\/tr>\n
101 +<\/td>\n\u00a326<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

This calculation can only be used on heating and electricity. It\u2019s also worth keeping in mind that the flat rate might work out being less than you paid, so you may end up paying more tax.<\/p>\n

Whether you\u2019re new to working from home or you\u2019re looking to be a bit more productive, these tips should help motivate you and maximise your productivity:<\/p>\n