# Self-employed people - how much do you deduct for your home office?



## scifisam (Nov 27, 2011)

By that I mean offset against taxes, that is.

I followed the HMRC guidelines for sole traders, worked out the area of my flat that's used for business, then worked out the time that that area's solely for business purposes, and made what HMRC call a 'reasonable estimation' when it comes to the cost of rent, utilities, etc. Basically I worked out that my office area is slightly less than a quarter of my space and my time there is slightly more than a quarter of my day, so deducted one-sixteenth of my rent, etc. I don't have to provide receipts for this - it's just a reasonable estimate.

A friend of mine says her accountant deducts one third all the time. One third of her rent, etc. She is also a sole trader working from home. It seems excessive. There's no way 1/3 of her flat is solely for business use, 24/7.

This year it's not a problem really, since my income is low anyway. But I don't want HMRC to suddenly query why my expenses have gone up if I realise I was wrong next year.

So, how much do you claim?


----------



## Maurice Picarda (Nov 27, 2011)

Mrs P's accountant believes that the guidelines have changed recently, and now only £250 a month or so can be offset without potentially triggering an investigation. Prior to that he took a quarter off.


----------



## Divisive Cotton (Nov 27, 2011)

I claim 1/10 on my gas and electricity and I live in a one bedroom flat


----------



## trashpony (Nov 27, 2011)

To be fair, £250/month is a fair whack


----------



## shakespearegirl (Nov 27, 2011)

£670 a year, not sure how my accountant arrives at that figure though..


----------



## _angel_ (Nov 27, 2011)

It never even occurred to me to deduct for the "office" space, but since it's a bedroom and a playroom/nursery as well, I don't know if it'd count.


----------



## Limejuice (Nov 27, 2011)

My accountant deducted £1600 for the year.

He added up my electricity, fuel oil, water, sewage, insurance (building and contents),council tax and mortgage repayments and divided it by the amount of space dedicated to business.

One seventh of the total. I have a dedicated office.

In previous years he deducted about £50 a month / £600 a year, as a sort of "rent", but decided this year to ignore the space itself and go for a fair share of the expenses, as it was a way bigger number.

ETA: I trade through a limited company rather than sole trader.


----------



## newbie (Nov 27, 2011)

nb if you own your home the proportion you claim as an allowable business expense can attract capital gains tax when you sell.


----------



## Maurice Picarda (Nov 27, 2011)

I  misunderstood, by the way. She's only taking £250 off a year. Sounds like her accountant is being very cautious indeed on the new rules, especially given what everyone else is claiming.


----------



## Andrew Hertford (Nov 27, 2011)

I don't use an accountant, my finances are so easy I do them myself. I basically add up what I earn and take off what I spend (materials, travel etc) plus around 25% (?) of utility bills. Also helps that I'm way below the VAT threshold. I did have an accountant for a couple of years but she didn't do it any differently.

The amount I deducted last year btw was just under £1000


----------



## porp (Nov 28, 2011)

Limejuice said:


> My accountant deducted £1600 for the year.
> 
> He added up my electricity, fuel oil, water, sewage, insurance (building and contents),council tax and mortgage repayments and divided it by the amount of space dedicated to business.
> 
> ...


Perhaps I have misunderstood, but I take this to mean that you trade through a limited company, and the house belongs to you (and not to the company).

If this is the case, how is the limited co entitled to any deduction for the office etc expenses. Unless it firstly rents the house from you, and you declare the rents received as income?


----------

