How much tax relief could you claim for home expenses?

Being a sole trader who works from home some or all of the time will increase your domestic bills, but thankfully you can claim some costs as tax expenses, which could lower your tax bills significantly. So, how much could your tax savings be

For the 26/2725/2624/25 tax year:

1 Enter your details below

Total annual bills

  • Heating
  • Electricity
  • Mortgage interest
    You cannot claim for the capital repayment part of your annual mortgage repayment costs – only the mortgage interest proportion.
  • Home insurance
    If you plan to start operating a business as a sole trader from your home, speak to your current home insurance provider to find out whether you need to take out additional insurance cover.
  • Repairs
    Alterations and improvements to a property, for example, an extension or left conversion, cannot be claimed as an allowable expense.
  • Cleaning bills
  • Rent
    If you plan to start operating a business as a sole trader from a property you rent, you need to make sure that this isn’t prevented by a term in your rental agreement.
  • Council tax
  • Rooms in your home
  • Rooms used for business

Average monthly usage of each room

Room 1:
  • Total hours used
    Include the total number of hours the room is used during a month.
  • Business hours used
    Include the number of hours used for business during a month (this should be equal to or less than the total).
  • Allowable costs
    £0.00

2 View your allowance

Use of home allowance

Monthly use: Relief per month:
  • 25 - 50 hrs
    £10
  • 51 - 100 hrs
    £18
  • 101 + hrs
    £26
  • Estimated allowance
    £0.00
  • Tax & NI relief @ 26%
    £0.00
  • Tax & NI relief @ 42%
    £0.00
  • Tax & NI relief @ 47%
    £0.00

Actual expenses

  • Annual expenditure
    £0.00
  • Private use deduction
    £0.00
  • Estimated allowable expenses
    £0.00
  • Tax & NI relief @ 26%
    £0.00
  • Tax & NI relief @ 42%
    £0.00
  • Tax & NI relief @ 47%
    £0.00

Please note: Not all allowable costs are included in the calculator above, there could be others, while tax saving figures shown are estimates for illustrative purposes only. Seek tailored tax advice for exact figures and guidance.

Sole trader home expense tax relief FAQs

What is an allowable expense?
An allowable expense is a cost that HMRC allows you to claim and deduct from your income to reimburse you personally for that expense. To qualify as an allowable expense, something must be “wholly and exclusively” for the purpose of business or trade, you cannot claim for personal costs.

What if a cost includes both business and personal use?
If a cost includes both business and personal use, whether that’s electricity, a mobile phone or something else, you must use a reliable method to calculate what proportion was for business use and only claim that amount as an allowable expense.

Can you give an example of how to work out business use for allowable expenses?
OK, let’s say there are five rooms in your home and you use one as a full-time office, studio or place or work.

  • Your electricity bill for the year is £1,000, so you can claim £200 as an allowable expense (£1,000 divided by five, presuming the rooms are of reasonably equal size).
  • If you ran a part-time business and used a room in your house as an office two days a week, you could claim £57.14 (ie £200 divided by seven x two) as an allowable expense, in addition to other allowable expenses.

Need to know! If you sell your home, Capital Gains Tax may be payable on the room in your property if used exclusively for business. To avoid this, it’s best if the room is used for another purpose, for example, a guest bedroom.

What if I don’t want to work out actual allowable expense costs?
You can claim a flat rate amount under simplified expenses, but you can only do so if you work for 25 hours or more a month from home. The flat rate ranges from £10-£26 a month; the more hours you work from home, the more you can claim.

Need to know! The flat rate does not include telephone or broadband expenses, so you can claim the business use proportion of these actual total costs.

What if I claim the trading allowance?
If you claim the trading allowance or the property allowance or both (they each enable you to earn £1,000 tax free), you cannot claim allowable expenses as a sole trader or landlord. Be sure to work out the most tax-efficient option for you.

What if I have premises or mainly work remotely?
You can still claim allowable expenses for having an office in your home, which you use to administer your sole trader business, whether after hours, at weekends or another time.

How do I claim allowable expenses?
You claim via your annual Self Assessment tax return. You tot up and summarise all of your allowable expenses for the tax year, and the total is taken away from your taxable income to find out how much Income Tax (and possibly National Insurance if you’re a sole trader) you owe.

Will I need proof of my allowable expenses?
You don’t have to provide HMRC with proof of your expenses when you file your Self Assessment tax return, however, you should keep invoices and sales receipts safe, because HMRC can later request proof. HMRC can also ask to inspect your financial records.

How should I record allowable expenses?
It’s best to regularly enter details of your costs and income in accounting software, then you won’t forget any allowable expenses when you’re completing your Self Assessment tax return. It will also save you lots of time and effort when completing your Self Assessment tax return, as all of your up-to-date allowable expenses will be conveniently summarised.

What if I’m not sure what allowable expenses I can claim?
If you’re in any doubt about what you can claim as allowable expenses when running a sole trader business from your home – find out – as it could save you lots of money. You can do your own online research, contact HRMC’s Self Assessment helpline or pay for tailored guidance from a professional tax adviser. It could save you a lot of money. The same is true if you’re a landlord.

What if I claim for an expense that isn’t allowable?
Tax returns can be amended within 12 months of the filing deadline. If you later find out that you’ve claimed for “disallowable expenses” or your allowable expenses are higher than they should be – correct your Self Assessment tax return ASAP.

Thereafter, if HMRC discovers an inaccuracy you’ll have to pay any additional tax due, while penalties can also be charged. These will be higher if you deliberately made a false allowable expense claim and tried to conceal it.

Save £££s off your tax bill!

Recording your expenses is quick and easy with GoSimpleTax – enabling you to claim all of your tax expenses and minimise your tax bills.

  • Simply scan or use your phone to snap your receipts and upload them. Your accounting records will be updated quickly and accurately.
  • GoSimpleTax enables you to effortlessly track your expenses, so you know how much you’ve spent and you don’t forget to claim anything.
  • Your receipts will be safely and securely stored should HMRC ask for proof of your tax expense claims.

And because your tax expenses are accurate and fully kept up to date, completing your Self Assessment tax return will be far much quicker and easier, which means you’ll save time as well as money with GoSimpleTax. Start your FREE trial today!