Finance experts are reminding the self-employed and people who work from home that they may be able to claim some of their heating and household bills against their tax bill. If you are a sole-trader who works from home you can claim your heating as a running cost for your business and save on your tax bills.
Similarly, you may be able to claim tax relief for additional household costs if you have to work at home for all or part of the week. There are strict conditions on who is eligible to make a claim with details provided by the HMRC here.
Who can claim tax relief
You can claim tax relief if you have to work from home, for example because:
* your job requires you to live far away from your office
* your employer does not have an office
Who cannot claim tax relief
You cannot claim tax relief if you choose to work from home. This includes if:
* your employment contract lets you work from home some or all of the time
* your employer has an office, but you cannot go there sometimes because it’s full
What you can claim for
You can only claim for things to do with your work, such as:
* business phone calls
* gas and electricity for your work area
You may be able to claim tax relief for additional household costs if you have to work at home for all or part of the week
(Image: Getty)
Making a claim is made through Self Assessment tax returns, which have to be filed by January 31. Significantly, you can claim for this tax year and the four previous tax years. The tax rules state that workers cannot claim for things that they use for both private and business use, such as rent or broadband access.
How much you can claim
You can either claim tax relief on:
* £6 a week
* the exact amount you’ve spent
Mike Parkes, technical director at GoSimpleTax, said: “It is possible to claim for electricity and gas bills – to do this, self-employed people need to reliably and accurately work out the proportion of business and personal use. For example, say there are five rooms in the home and one is used as a full-time office, studio or place of work, with a yearly electricity bill of £1,000. Dividing that by five (presuming the rooms are of reasonably equal size) means it would be possible to claim £200 as an allowable expense. “
Mr Parkes explained that bills such as internet or telephone use at home can be divided in a similar way to heating bills and listed as a tax expense. Alongside this method of calculation, if you work 25 hours or more from home a month, you can claim a flat rate under simplified expenses which ranges between £10-£26 depending on how many hours you work.
Mr Parkes said: “Self-employed people claim allowable expenses via the annual Self Assessment tax return, through summarising all of the allowable expenses for the tax year. The total is then taken away from the taxable income to find out how much Income Tax and National Insurance is owed. The quickest and easiest way to record allowable expenses is to regularly enter details of costs and income into accounting software, so all of the expenses are up-to-date and conveniently summarised.”
If you still need assistance with your tax return, you can use this work-from-home tax allowance calculator to work out how much you can save on household bills.