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Claiming Home Office Expenses as a Contractor

Published on Thursday, January 8, 2015

Written by Lauren Ellingham

Working from home can be deemed a luxury to some however, the costs associated can be quickly forgotten and ultimately hit you with a surprise when certain bills drop on the doormat. Another luxury for Contractors however is that you can offset a proportion of these expenses against tax.

Prior to calculating which expenses can be claimed for regarding your ‘home office’ you must determine whether;

a. The office is only used for paperwork and accounts

b. The office is where the majority of your working time is spent

If your answer is (a) then a flat £4 per week can be claimed to reclaim costs incurred with regards to utility bills and so on – in this instance you must carry out a small percentage of your work at the home office per week and this work should not be able to be carried out at your appointed site of work.

If your answer is (b) however then further calculations must be taken in the form of 3 categories (time, usage and area) in order to claim the following expenses:

  • Gas and Electricity
  • Metered water costs
  • Business phone calls

There are 3 simple questions to ask yourself when calculating the appropriate level of home office expenses;

  • Time – How many hours per day is the home office used for business?
  • Usage – How much cost is incurred by the home office? i.e. electricity and so on
  • Area – What proportion of your house does the home office take up?

 

Looking at this topic from an alternative perspective, you may incur increased utility bills however, think of the amount you are saving on travel expenses. How much does it cost you to get up, get dressed and walk into your home office downstairs? Not a penny. Furthermore, the commute into work will always offer up the temptation for the odd £3 here and £5 there to be spent on food, drink and “essentials”. This again is avoided by working from home.


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