Use of home costs

[TheCyclingProgrammer]

You don’t have to claim the flat rate but the only alternative - without going down the more complex route of renting space to YourCo - is to claim the actual additional costs you incur by working from home.

This means it cannot include any fixed costs that you already pay as they are not wholly, exclusively and necessarily for business purposes. In short, you can claim for the additional utility costs but it’s down to you to calculate the additional costs in a reasonable way and keep evidence of how you calculated in case HMRC queries it.

When you calculate it - say as a percentage of floor space that you use as an office, or by dividing the number of rooms and then adjusting for actual working hours, you might find it doesn’t work out a massive amount more than the flat rate.

I don’t know if the whole “rent a room to your company” approach is still recommended but this is very much a “talk to your accountant” option.

[malvolio]

You don’t have to claim the flat rate but the only alternative - without going down the more complex route of renting space to YourCo - is to claim the actual additional costs you incur by working from home.

This means it cannot include any fixed costs that you already pay as they are not wholly, exclusively and necessarily for business purposes. In short, you can claim for the additional utility costs but it’s down to you to calculate the additional costs in a reasonable way and keep evidence of how you calculated in case HMRC queries it.

When you calculate it - say as a percentage of floor space that you use as an office, or by dividing the number of rooms and then adjusting for actual working hours, you might find it doesn’t work out a massive amount more than the flat rate.

I don’t know if the whole “rent a room to your company” approach is still recommended but this is very much a “talk to your accountant” option.

But that approach brings on a few other details, such as any mortgage restrictions on carrying on a trade, house insurance complications, both of which having a dedicated area of the home implies since it has to be "wholly and exclusively" and the minor detail of CGT when (if) you sell the house, since that will be due on the proportion of the total house dedicated to office use.

All in all, not worth the bother. Spend the money on dedicated company furniture and tools instead.

[jamesbrown]

The general rule is to spend more time worrying about your rate or skillset and less time worrying about saving a tiny amount in tax on itemised working from home expenses. It is essentially impossible to (legitimately) beat the default amount of £26 per month by a margin that is worth the effort.

[Lance]

The general rule is to spend more time worrying about your rate or skillset and less time worrying about saving a tiny amount in tax on itemised working from home expenses. It is essentially impossible to (legitimately) beat the default amount of £26 per month by a margin that is worth the effort.

https://forums.contractoruk.com/acco...ml#post2951845

[oneshot]

I have been using this model: https://www.freeagent.com/guides/exp...ted-companies/

Is this not recommended?

[Lance]

I have been using this model: https://www.freeagent.com/guides/exp...ted-companies/

Is this not recommended?

I've never seen that before. Looks simple enough.
I wonder if you'd need accurate heating bills.
Or the direct debit made up crap that the energy companies use to subsidise their business using your money.

[northernladuk]

I have been using this model: https://www.freeagent.com/guides/exp...ted-companies/

Is this not recommended?

No.

[TheDude]

Do that and you open up whole areas for HMRC to have fun with - just take the £28

My accountant has told me HMRC are taking a dim view of people who built cabins in their garden during the pandemic and tried to do this through their company.

[northernladuk]

My accountant has told me HMRC are taking a dim view of people who built cabins in their garden during the pandemic and tried to do this through their company.

Quite rightly so as I'd imagine many of the claims will fall apart under the slightest scrutiny.

[TheCyclingProgrammer]

But that approach brings on a few other details, such as any mortgage restrictions on carrying on a trade, house insurance complications, both of which having a dedicated area of the home implies since it has to be "wholly and exclusively" and the minor detail of CGT when (if) you sell the house, since that will be due on the proportion of the total house dedicated to office use.

All in all, not worth the bother. Spend the money on dedicated company furniture and tools instead.

Well yes, but none of those issues are insurmountable. It’s fairly easy to structure a rental agreement to avoid these problems. Hence, “talk to your accountant” if you really want to pursue it. Personally I never bothered either, you also need to account for the rental income on your tax return and offset it with legitimate expenses.

Claiming “additional costs” with sufficient evidence is fairly straightforward though with no additional complications, again, if you can be bothered to work it out.