Working from home expenses

Business expenses

As a contractor, you’ll need to pay out for various costs in order to carry out your work, from travelling to buying equipment.

One of the biggest advantages of self-employment is being able to claim back on some of these costs, which can then be used to reduce your tax bill at the end of each year.

However, you can’t claim anything and everything you like – HMRC definitely won’t accept an all-inclusive luxury holiday as a legitimate work expense! You need to ensure that each purchase you wish to claim has been made ‘wholly and exclusively’ for business purposes.

Typical allowable expenses include:

• Travel costs – such as fuel, parking, hire charges, train/bus/taxi/airfares and accommodation while away for business reasons.
• Office costs – such as stationery, printer ink/cartridges, postage and phone/mobile/internet bills.
• Clothing expenses – if you require specific protective wear, a uniform or a costume.
• Financial costs – such as hiring an accountant or business insurance.
• Training courses – but they must be related to your current line of work.
• Advertising or marketing – such as website costs.
• Business premises costs.

It’s also possible to claim back on some pre-trading expenses – take a look at our Can I claim for pre-trading expenses? page for more information on this.

Working from home expenses

Depending on the type of work you do, you may find yourself spending quite a bit of time carrying out these tasks from home.

It’s possible to claim a proportion of certain household costs, such as

• Mortgage interest or rent
• Heating
• electricity
• Internet and telephone
• Council tax

You can calculate these costs by either looking at the number of rooms you use for business purposes or the amount of time you spend working from home.

Your accountant will be able to help and advise you on how to work this out.

Another option is to use simplified expenses; however, this is only available for sole traders and business partnerships that have no companies as partners – not limited companies.

Some people prefer this method as it means you can calculate some of your expenses using flat rates instead of having to work it all out individually.

How do you claim an expense?

You claim for your expenses via your self-assessment tax return.

It’s worth keeping a note and records of all your expenses for at least six years – HMRC could question you at any time should they have concerns about what you’ve been claiming for.

Sign up with us today if you need some help with your expenses. If you need any further information, please give us a call on 01442 795 100, email sophie.lewis@dolanaccountancy.com. or contact us via live chat.