Business Expenses When Working From Home

If you are working from home, you are allowed to claim a portion of certain expenses on your tax return, such as electricity, heat and telephone costs. Bills do not need to be provided separately but only a reasonable amount can be claimed on your return.

For expenses which relate to both business and personal use, only that which is related to the business is allowable. Expenses such as electricity and rent will need to be apportioned and only the portion relating to the business can be included as an expense. You can also claim a portion of mortgage interest in relation to the space used in the house. However, if you claim relief on your mortgage interest this may effect any current tax relief you receive at source on your mortgage interest. If part of your house is used exclusively for business purposes this part of the house will not qualify from Capital Gains Tax relief that applies to the private element of your house.

Office furniture and equipment in the home that are purchased for business use are allowable as expenses with the same rules of capital allowances in a work place applying, i.e. 12.5% of the cost can be claimed as wear and tear each year for 8 years.

Similarly, if you use a vehicle for business and private purposes, you can claim capital allowances (wear and tear) and running expenses related to the business. This needs to be calculated accurately, with mileage records being kept including the number of miles travelled for business purposes. It is important to note that journeys from home to your regular work place are not business expenses. As well as this, keep in mind that the CO2 rating of your car can affect what capital allowances you can claim on a car used in the business.

Date published 13 Sep 2013

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.