Working from home? 7 expenses you should be claiming
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- เผยแพร่เมื่อ 15 มิ.ย. 2024
- Who wants to pay too much tax? No one, right? Well, if you’re working from home and not claiming expenses, you will be doing just that. And what a horrible thought that is, right?
In this episode of Whiteboard Thursday, Nick Campion walks you through 7 ‘must-claim’ allowable expenses to lower your tax bill. So, if you are a sole trader, limited company or an employee working from home - check this video out
Check if you can claim: www.tax.service.gov.uk/claim-...
Blog article:
www.1stformations.co.uk/blog/...
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Thanks for pointing this out, helpful as always!!
Thank you David. What would you like to see next?
Another very useful video Nick. So clear and concise! Thank you as always😊
Thanks for your support Sara! Is there anything you would like advice on in our next video?
Great advice, as usual! Thanks for sharing
Glad it was helpful Priscila! What would you like to see next?
It's the second time I watch a video from this channel, and I found it super useful, and very informative content. Good Job! I'll try to see the other videos when I have time
We are pleased you liked the video. What else would you like to see us cover?
Thank you Nicholas, very helpful
We're glad you found the video useful. Is there anything you'd like us to cover next?
Thank you! Very informative.
You are welcome, Sandra. What was your main takeaway from this video?
Terrific video - very informative. Thank you
We're glad you found it informative Mary. Are you intending to file your Self Assessment in the coming month or so?
Very useful video, thank you for putting this together for us. Definitely useful considering the current climate!
Thank you for your comment Rakhee! More so now than ever! How have you found working from home?
Great video Nicholas! I'll be sharing this with friends and family who will benefit from this advice 😊
Thanks Zafirah! Please do share the video with your friends and family, hopefully they can also benefit. What did you like the most?
Very helpful for me and I'm sure for many others - keep up the excellent content :)
Thanks, will do! Have you got any suggestions for us to cover next time?
Another terrific episode and so relevant - well done Nicholas and Team.
Thank you Graeme! What did you learn that you did not know before?
Excellent info that I’m sure a lot of people won’t be aware of, very useful!
Thanks Douglas! What did you learn that was new?
Very informative, I've made sure to pass this over to some self employed friends who need to know this
Thanks Angus! Please do pass onto your friends, we hope that they can learn something new. What surprised you most from this video?
Loving a video, would have been fun to see a festive themed one
Hi Peter, thanks for commenting! We agree, watch this space! and Merry Christmas
Amazing perspective guys, thank you
Thank you for your kind comment, Kinicha. Are you currently working from home?
@@1stformations Hello dear, Yes, I'm work from home.
@@KINICHADACOSTA Great! What do you do for a living, if you do not mind us asking?
Lot's of really useful information for employed and self-employed homeworkers.
Glad you think so! Did you learn anything new?
Great video. Had no idea I could claim a portion of my council tax!
We're glad you found this useful, John! It's something a lot of people tend to forget when they're working from home! Is there a particular topic you would like Nicholas to cover in the next Whiteboard Thursday?
Very useful video! Many people can really benefit from this information 👍🏽
Thanks! We are pleased you liked the video. What would you like to see next?
This is so helpful, especially with so many people working from home during the pandemic.
Thanks James, we are glad you liked the video. What would you like to see next?
pro tip: you can watch movies on Flixzone. Been using them for watching loads of movies recently.
@Lionel Zaid definitely, been using Flixzone} for months myself =)
@Lionel Zaid definitely, been using flixzone} for since november myself :D
Thank you for such a great video😃
Pleasure! Are you filling in your Self Assessment return?
@@1stformationsYes thank you🤗 Keep up the amazing videos👍
@@MotherNaturesGiftsAndCrystals1 Great. What gifts does your business sell?
Thank you for the great videos. Im a director and employee of my limited company and would like to know how to pay myself. Thanks
Hi there, we are pleased you are enjoying the videos! As the company director, you can pay yourself through PAYE and you can also draw dividends. More information on this topic can be found via our blog post - www.1stformations.co.uk/blog/most-tax-efficient-way-to-pay-myself-from-my-limited-company/ Let us know what you think?
Thank you so interesting
Glad you enjoyed it! Which expense will you be claiming?
Better start now than never, really relevant info considering the times
Hi Angus, thanks for commenting! Is there anything else you'd like to see a video on?
What a great video. Never knew about 5 of these & certainly not the mortgage and council tax ones. I have a few questions.
1. I exclusively use 1 room out of 7 for WFH, am PAYE as an employee of a company. I’m assuming therefore I can claim 14% back of the mortgage interest per annum and 14% of the council tax?
2. How long in arrears can I claim this? I have never claimed for this and have been WFH for over 10 years.
3. What are the implications for capital gains tax should I sell the house in the future? If I sell after I have retired and no longer claim the room as a WFH benefit, does that negate all the years I had claimed?
4. My work provides a WFH extra payment per month - however this is taxed. It’s to cover both bills and broadband usage. Can I still claim the utility bills by individually working out the 14% of the cost (which is likely more than what they give me after tax).
5. My partner also WFH but she uses a bedroom as her office. She has no business office but is also out a lot, approx 50/50. Can she also claim the same percentage individually or is it one per household (mortgage/council tax ect). The mortgage is in both our names, as is the council tax.
Thank you for your kind questions. For points 1 and 2 - you are correct, and you should be able to claim back up to 4 years.
With regards to point 3 - you would need to speak to an accountant or tax adviser unfortunately.
For point 4 - It is unlikely HMRC would ever find this out - in practical terms.
For poiint 5 - Yes, she should be able to based on your scenario.
What do you and your partner do for a living?
Thanks for the information, very clear.
What happens I'm paying rent (which include bill and internet) for only a room in a shared flat? does it mean that I use 100% of the space? How does this translate into a possible claim?
Hi Francesco, you are welcome! In regard to your question, if you do not have a designated room, and the room is partially used for living and partially used for work, you can only claim expenses on things such as broadband and electricity for the time it is used, when it comes to work. You will not be able to make a claim for the rent. For more information please click the following link - www.tax.service.gov.uk/claim-tax-relief-expenses/only-claiming-working-from-home-tax-relief
Thank you for the great video explanation . My questions are:
1)The £6/week you are referred to should be claimed for each bill such as for Gas=£6 a week, for electricity=£6 a week etc... or you have only to claim £6 a week in total for all? In addition I have paid a desk and chair for my job, should I claim this?
2)In lockdown period I did work only two weeks from home. and changed the Job. Do i have right to claim these two weeks?
Thanks for the positive feedback, and the questions. 1) You can not claim for each bill, only one claim per week of £6. Regarding the desk and chairs - are you employed or self-employed? 2) Yes, you can claim for those 2 weeks. We hope that helps!
Hello, I am just about to fill in my first self-assessment form. I am receiving my state pension and a small company pension but have started earning some extra money, which will take me over the tax threshold. My question is, being of pensionable age, will I need to pay Self-employed National Insurance? Thank you.
Thanks for your question.
People over the state pension age are only required to pay Class 4 National Insurance contributions. Class 4 contributions are a profit-based tax, calculated by the level of profit in the tax year. Do you know whether you will need to pa these as part of your self-assessment?
No. I reached state pension age 4 years ago. So I don't believe I have to pay the. Thanks for your reply.
@@twojays2 OK. I would recommend contacting HMRC if you require further clarification.
It should be noted that some pensioners do have to pay Class 4 National Insurance Contributions. Have you been specifically informed you will not have to pay this?
Thank you for a great video.
Question: since releasing this video do all of these expenses remain the same?
Can a PAYE employee WFH submitting a self assessment, still claim a proportion of mortgage/council tax/utilities etc.?
Thanks for getting in touch - we're pleased to hear that you found the video useful.
The information in the video is still accurate. However, as a PAYE employee, you’re not entitled to claim relief against some of the expenses mentioned in the video, such as rent, mortgage, or council tax. These things only apply to business owners.
As an employee working from home, you can claim tax relief through HMRC if your employer has not already paid your expenses and you have additional household costs as a result of working from home.
To be able to claim, you cannot have just chosen to work from home. One of the following rules must also apply:
• there are no appropriate facilities available for you to perform your job on your employer's premises
• your job requires you to travel an unreasonable distance to and from your employer's premises on a daily basis
• you are required, under government restrictions, to work from home
You can find out more information here: www.gov.uk/tax-relief-for-employees/working-at-home. This page also contains the link to claim tax relief online. You’ll need to answer a few questions to determine your eligibility.
Informative video! Some sources I’ve found on the internet say to not count a kitchen when portioning the house and some say to count a kitchen. I have checked the HMRC website but I can’t find any information either way. Do you know where I could find this information from an official source?
Thanks for the feedback! HMRC will be the only official source. Have you tried giving them a call? (0300 200 3300)
Hi, this is a great video and subscribed! Everything explained made sense apart from this bit: I wanted to know how I'd calculate if, let's say, my rent including all bills (internet, heating, council tax) is £725pcm for my room. I'm not sure I can use the room-calculation thingy since the £725pcm is for the room as per my rental contract and not for the entire house since I'm a private tenant. Advice?
If you have an individualised bill for your room only, then your expenses should be based on the whole amount for that room (as if it was a house). Does that make sense?
Many thanks for this. Any idea about whether it would be possible to claim a part of the costs of airbnbs if you're a UK tax resident but work online while abroad (as a "digital nomad")?
Hello - as you are not residing in the UK, you would be unable to claim working from home expenses. Are you talking about some other kind of claimable expenses?
Awesome info nick.. It will be good if you guys make a video for What expenses are allowed for International/non-resident Company owners
That's a great idea. We will look into this!
@@1stformations Thanks!
@@SaleheenKhans You are very welcome!
Great video. But what if you work from home for a portion of the week?
Hi Christopher. Generally speaking, hybrid workers do not qualify for this tax relief, as the requirement is that the household expenses must be incurred as 'necessary' in the performance of duties, whereas home working in a hybrid fashion is a preference and not a necessity in most cases. This will, however, be dependent on why you work at home during hybrid working.
Is the reason you work at home due to preference?
Great video Nicholas and team. very comprehensive! I do wanted to ask you though about the funny situation where I am a full time employee working from home and have 30-40 hours per month as a sole trader (consultancy) again working from home. Is there any different guidance for that when it comes to expenses I can claim?
Thank you for your comment, Angel! We're glad you found the video to be very informative. In answer to your question, we're not aware of any specific guidance from HMRC relating to your situation and would suggest seeking the advice of an accountant on this matter. Is there anything you would like us to cover in our next Whiteboard Thursday series?
@@1stformations you’re obviously not interested in helping answer his / her question
@@hvdb4492 We're always trying to help our viewers as best we can, as you can see from other replies to viewers. Unfortunately we are unable to provide tax advice as we are not regulated to do so.
Great video, I have a question - when you say "claim" is this in terms of just booking keeping, so in the balance sheet the amount "claimed" is removed from the profit total, or should also a physical amount of money come from the business to myself for a proportion of the council tax, mortgage interest, broadband etc?
Thank you for your question. You will need to make a tax relief claim to HMRC. Have you registered for Self Assessment?
Informative, but can you please do a separate video for allowable expenses for sole director Ltd Co working from home? To group them together with a self employed or company employee working at home it's confusing. I asked my accountant about claiming a share of council tax, rent, home broadband etc but was told these are not allowable for a Ltd Co sole director working at home.
We will see what we can do Kevin. What reason did they give you regarding why you couldn't claim these as a sole director?
@@1stformations They simply quoted HMRC guidance. My Ltd company currently claims the £312 per year no-quibble allowance, but I have recently moved to a smaller home where my office is now one of only three rooms available, and I would like to know if this can be reflected in a more realistic claim (particularly with bills soaring). Many thanks.
Thank you for sharing. I am self employed, sole trader trying to work out how I would go about working out what to claim for one day a week admin at home in a two bed rented flat where my desk area is set up in half my living room. Am I best using the flat rate? Many Thanks for your time.
We're very sorry but we can't comment on specific cases such as this.
Thank you for the great video and help, Nicholas! I was reading some of the comments, but was unable to find an answer to my question. Both me and my partner live together and have a partnership and would like to claim a flat rate for using our home as an office. We understand we can claim it twice (2 times the flat rate) but we are not sure how to claim it. We have contacted the HMRC but did not get a clear answer.
Thanks for your question Ana. May we ask if you mean you and your partner have a civil partnership or a business partnership? This will assist us in answering your question.
@@1stformations Business partnership, we are not in a civil partnership. Thank you Nicholas.
@@Ana-vv7kx Thanks Ana - are we also correct that you and your partner are both going to be filing a Self Assessment tax return shortly?
@@1stformations Yes, that's correct.
@@Ana-vv7kx Thanks Ana. In the first instance. we recommend you check if simplified expenses are best for you and your business partner. Have you checked this already? You can do so via this link: www.gov.uk/simplified-expenses-checker
How do you calculate the room if it is your living room.
Hi Janice, thanks for the question. Do you work exclusively from your living room, or from other rooms in your house too?
I live in a 2-bed flat and as both bedrooms are in use, I have my office set up in the living room. Instead of calculating my expenses based on the number of rooms, could I calculate based on the number of hours I work during an average month? If so, could you suggest a formula I could use to work this out? Thanks
In this scenario, you should be able to calculate it by the % of each day you work in the living room, and if you are the sole person using it during this time. Does this help?
Great video guys. I have a few questions:
1. If you’re an employee and currently renting (e.g. 2-bed flat at £900 x month), and you use one of the bedroom to work can you claim back half of the rent?
2. If you buy a new laptop strictly for work (your employer doesn’t provide you with one), can you claim this back?
Thank you for your great feedback Dee! What did you learn from this video? To answer your questions - No, you cannot claim back half of the rent. The proportion is based on the number of rooms used - i.e. if you have a living room/kitchen/two bedrooms, you can claim back 1/4. As to your second question on the laptop, yes. This should be claimed as a capital allowance and more information about that can be found via the following link: www.gov.uk/capital-allowances which should help!
@@1stformations Correction here, per the 4 minute mark above you state that HMRC DOES NOT count kitchen or bathroom as rooms which is correct (hallways neither). So with a 2-bed that you use one room exclusively for office, then you could claim 1/3 rent in that case.
@@joenagy Thanks for your correction Joe. Do you specialise in this area?
Can you claim for the purchase cost of a laptop, used partially for a tutoring business and mainly for preparing school lessons
Thank you for your comment, Robin. If you purchase a laptop for use in a business then you can claim this as a business cost. If it is used for part business, part private usage, then the relevant business proportion should be claimed.
Very informative, something which I was never aware of ! However, I still have some questions -
1) If both me and my wife from the same residence/house- are these 7 (any/or all) applicable 1 claim per each household or we can individually claim on our self assessment tax returns ?
For ex : we both use 1 room each to work out of 4 total rooms in our house ( incl living room) , so to claim mortgage as an expense ,can she use 1/4 x mortgage and I use the same fraction again or is it restricted/household?
2) Same question for utility bills/broadband/council tax /contents insurance : 1/3 x utility bill amount for each of us or restricted /household ?
Thank you for your questions, Vibhu. In general terms, you can both claim on your separate Self assessment forms, but you must ensure you do not make a duplicate claim - i.e. you claim for a full reduction and so does your wife, and the reduction is double what it should be as a result. You should only claim for the portion of the cost each person is using. HMRC have the ability to investigate and fine people who overclaim.
The same question applies to the mortage and utility bills costs.
Do you need more help regarding this?
Thank you again, if i plan to claim £6/week wfh related tax for simplicity , am i still allowed to claim utility bills , internet upgrade cost, work related mobile phone bills, contents insurance without incurring a capital gains tax bill?
Are mortgage and council tax the only two elements which if claimed would be subjected to CGT if the property is sold etc? Pls advise
@@rajeevtaruna Thanks for your reply Vibhu. The £6 per week is an either/or scenario - you can either claim £6 per week, or you should claim each item individually - you cannot do both. In addition, you cannot claim relief for insurance, council tax, water rates and mortgage interest or rent.
Mortgage and council tax which are likely to be applicable to Capital Gains Tax; however, you should be aware that if you work from home this coul lead you to lose Private Residence Relief. You should ask an accountant for more detailed advice on this matter.
Are you intending to claim for the flat rate or submit an itemised claim?
Really useful video and very clearly explained. Following the advice you give, my expenses would be around £525 per year. Would I be better to use the £1k Trading Income Allowance instead of claiming actual expenses? Also, with the Trading Income Allowance, given that I have started my self-employed work from January 2022, could I use the full £1k in the 2021/2022 tax year, or would I only use a proportion for the year - say, 3 months of the 12 month year, so £250 on my self assessment in year 1? Thank you!
Thanks for your question Julia. You should be able to use the £1k Trading Income Allowance for what you have described.
With regards to Self Assessment, if you have received no income in 2021, you will not be required to file a Self Assessment Return until the following Self Assessment period, as opposed to the current one, which is for the 2020/21 tax year.
Did you have any self employed income at all in 2020 or 2021?
@@1stformations Thanks for your reply. Up until December 2021 I received income from my employer (I was a teacher) so this was taxed and NI paid. I also received corporate pension income which was taxed. I left my teaching post in December 2021 so from January 2022 I will now be receiving self employed income and my pensions (corporate pension and teachers' pension). The TP isn't currently being taxed as I will received £3k per year. The company pension is being taxed. So, to answer your question, no self employed income during the 2020 or 2021 calendar years or the 2020/2021 tax year.
@@juliafuller5968 OK - therefore you will not need to file a Self Assessment tax return until the next period. Were you aware of this?
@@1stformations Yes - my tax affairs for 2020/2021 are all sorted. My self employment started on 17.01.2022 and I will make more than £1,000 via self employment activities so I am planning to file for 2021/2022 however my question is, because I only started self employment during the year, not for the full tax year, can I use the full £1k Trading Income Allowance or can I only use a proportion? Perhaps I'm over thinking this!
@@juliafuller5968 Yes, you can use the full £1k Trading Income Allowance even though you only started self employment during the year.
Have you considered using an accountant to file your Self Assessment tax returns?
good information!
Thanks Maksym! Are you planning to claim for working from home expenses?
@@1stformations It's new for me - i started now to learn this question for me, because i am selfemployed about 6 month and this all is new for me. Now I plan watch some additional info about this
@@MaksymTyshchenko Great! What do you do for a living?
@@1stformations Product manager (IT), in game company
@@MaksymTyshchenko Great - what type of games does the company make?
Thanks for the great video, Nicholas. I saw a few with 5 bedroom's example; however, didn't find an answer of my question :) What if we live not in a 5 bedroom house but, in a studio and still working from home, could we (a selfemployed) still calculate our rent, broadband, gas etc. as exspences and what portion would be reasonable? Thanks, great video once again.
Thanks for your question Kiril. In general terms: expenses incurred for a dual purpose (both business and private) can only be claimed if it is possible to identify a specific part used for business. If it is impossible to identify and measure the proportion of the cost incurred which relates only to business, no amounts can be claimed.
Does your studio flat have 1 room or 2?
@@1stformations thanks for your kind replay, it's one premise, apart of the bathroom and the closets.. last yea a friend helped me and put just one number as expences, didn't specify them as rent, utility bills etc. may be I'd do the same to achieve get an ammount that keep me whitin 12k.. Thank you so much, your advise was very helpful.
@@kirilkirilov1115 Thanks Kiril. Are you planning to file your own Self Assessment form?
I already have yes, even scheduled an instalment plan to pay :)
Thanks once again for your advice, you’re doing a great job here helping people.
@@kirilkirilov1115 We're glad we could help Kiril. Did you use an accountant or file it yourself?
Hi! Nicholas, Thank you so much for the video. My ex-husband is paying the mortgage. Can I still claim the mortgage tax relief on the interest payments, as it's also the spousal support? Many thanks
Can you confirm if your ex-husband pays th mortgage repayments directly to the bank and your receive a separate spousal support amount?
@@1stformations Yes. Thank you
@@izzysfunchannel1861 Thank you Izzy. It is unlikely you would qualify for mortgage tax relief because you are not the one making the payments directly to the bank.
Do you have a divorce order or court order which states anything relating to bills?
You mention mortgage as the top item to expense... But what is allowable? I'd have thought a capital repayment is excluded, but an interest repayment is included, but not the whole thing, surely that could lead to other problems later, such as CGT?
Hi Luke, you can deduct the following relating to your mortgage: mortgage interest, load to buy furnishings and fees incurred when taking out or repaying a mortgage. You should be careful to ensure that making a claim of this nature does not tip you into the higher rate of income tax, as this means you may lose out overall.
You cannot claim tax relief on capital repayments.
Do you only have one mortgage?
@@1stformations only one personal mortgage
@@dualcyclone1 OK great. How much of your home do you use homeworking for? I.e. how many rooms?
What if you are using your living room and not a bedroom can you do the same?
Thanks for the question. Can you provide a little more information about your situation?
Hi Nick, Thanks for the video. Useful and informatve one. I am not sure you would answer my query related to this vedio after about 10 months of posting the video. My query is anyway that I had to buy a garden shed to store many household items from the house space and free up one room for my working from home. Can I claim this expenses ?
Thanks for your query. In general terms, what you have described is not likely to be an allowable expense unfortunately. Are you still working from home?
@@1stformations Thank you for your swift response. Iam still working from home since March 2020..And I like know on what basis this claim would be refused. Thanks Nick.
@@daratcos7968 Your claim may be refused because it is not listed by HMRC as a potential allowable expense - i.e. storage areas are not listed on their website. Generally speaking, if it is not listed by HMRC, it is not allowable and would be refused.
Have you tried to speak to HMRC about this matter?
I'm currently working from home in a studio flat and wondering if there is a way to claim any of these expenses? I'm doing repairs in the living room. How do I calculate them? Thanks again for a great video.
Great Question! If you cannot claim a % of things because your house has one room, you should claim the flat rate of £6 per week using the method described in the video. Hope this helps you! What would you like to see next?
@@1stformations That's great, thank you very much for the info.
I would need to watch more of your videos to be able to say what I would like to see next. I don't want to ask for topics already available on your channel.
@@superdevids1 We hope that some of our other videos are useful to you. If you ever want to make a suggestion of what you would like to see covered we would love to hear form you.
I also live in a house that I have to pay freehold estate costs for, such as grounds keeping. Can I claim a proportion of this in the same way as a mortgage / council tax expense?
You should be able to claim back ground rent, service charges etc, for the maintenance of common areas. We presume that you own a share of freeholder and are not a leaseholder?
@@1stformations I am a freeholder, but the estate is under management which I have to pay fees for. Areas such as grass and gardens
Hi Nicholas great video. I'm confused about 1 thing about claiming mortgage costs. Our mortgage is 7.5k per annum approx 690 per month. We both work from home. Does that mean I can claim 20% of 7k based on a 5 room house where 1 room is an office? (We actually use 2 rooms as an office). 20% of 7k seems a lot especially if we both individually claimed each would make 40%. Thank you!!
The same question for our council tax too! Approx 175 per month. Would I get 20% of this back? And on costs overall can they be backdated?
Hi Adam - to be clear, you can only claim mortgage tax relief on the interest payments of your mortgage, not on the capital repayments part of your mortgage.
Do you have a capital repayment mortgage?
A lot of people do not claim wfh expenses because it is too complicated
Do a lot of your one director company clients claim all of the expenses you recorded above or do they go for just gbp 6 per week?
Thanks for your question. We have not polled our clients on this.
Do you claim wfh expenses?
Thank you for the video.
I work from home but in my garage, I'm a florist - is this classed as a room please?
Thanks for the question! Generally speaking, when talking about rooms, HMRC refers to “normal living spaces”. This means that places like hallways, landings and bathrooms are not included within this definition. Having said that, if you have a garage that also uses light and heating, then it may be included as well, so it’s possible you may be able to. We hope that helps!
@@1stformations It does thank you so much. One other question please if you don't mind answering? We had to buy a new garage door as the old up and over collapsed. Can I claim anything on the cost of that as it is the door/security to my workshop?
@@kellyminns9816 Thanks for the follow up question, Kelly. Can you confirm if you are self-employed or full time employed - to help us answer your question.
@@1stformations I'm self -employed.
@@kellyminns9816 Thanks, and do you own your home (with or without a mortgage), or do you rent?
Hi, i am confused. How do i claim these expenses if i am being paid via PAYE? Tax, NI and pension has already been deducted.
Is it only for self employed or limited company? Please explain to me as i can't comprehend it. Thanks.
Hi Jerryme - If your employer agrees to cover your work-from-home expenses, they can pay you a tax-free allowance of up to £6 per week. This means that the tax relief is paid directly to you, as part of your salary, and you won’t have to claim it from HMRC.
If your employer does not provide you with an allowance to cover your work-from-home expenses, you can claim it as tax relief from HMRC. The amount is deducted from your taxable income, and you can then claim it directly from HMRC. They will send you a cheque for the amount owed, once agreed.
Do you know if your employer agrees to cover your working from home expenses?
Very great video! Very helpful indeed! I just wonder as a self employed person working from home, can I claim the £1k trading allowance unconditionally? If yes, why would someone claim the flat rate of £6 per week coz it only adds up to £312, which is far below £1k!
Besides, can I also claim the capital allowance at the same time if I claim the £1k trading allowance? I’ve bought a phone for my business purpose. Thanks!
Hi there! There are conditions attached to the trading allowance - can you let us know what the income you generate is from, and if it is your main source of income?
@@1stformations well it is my only source of income, and the income generates from offering online services to clients
@@funniemsf6102 Thanks for your reply Funnie. Unfortunately the £1000 trading allowance is only applicable for hobby income, as opposed to main income. What type of service do you provide your clients?
What if the house is in the spouses’ name and mortgage goes from his account
Thank you for your question Shabana. You can only claim for allowable expenses if the expenses are in your name, unfortunately. Do you have any of the bills in your name?
Great vid, so the £312 (£6 p/w) standard is probably not as good as doing the individual calculation. Council tax proportion alone is over £400, without accounting for anything else... Broadband, energy proportions.
Thanks for the question! Yes you are correct, ordinarily it is more lucrative to make an individual calculation, but the issue is in relation to time and administration. Are you looking to complete an individual calculation?
@@1stformations I have submitted for this year but for next year it looks like it will be worth doing the individual calculation, it does seem worth taking the time to do it
@@car_ventures OK - great stuff. Do you use any software to keep track of your financial records?
@@1stformations not using software as there's not much to keep track of so it's pretty straightforward
@@car_ventures Great. What do you do for a living?
I know there is a rule that the kitchen does not count as a room. What if I use the kitchen to run a catering business? Additionally, I use the desk in the living room for business-related office matters. 2 bed house (2 bed, living room and kitchen) How to calculate my kitchen and "office" space?
Thank you for your question. Can you advise how often during a normal week would the kitchen be used for a catering business? Can you clarify if the living room is fully in use or if the desk only occupies a small part of the room?
@1stformations it depends on how many orders I have. I usually use it from Wednesday to Saturday/Sunday. From several to 10 hours a day. The use of my kitchen is not only about time, but also about the space that my cake stuff takes up, and it takes up more than half of the space. I don't know if it can be compared to "normal" work, e.g. at a computer. In the living room it's just a desk in the corner.
@@annazielinska548 OK - so to clarify, the cakes are there permanently?
@@1stformations equipment, tools, packaging and ingredients are there all the time.
@@annazielinska548OK. We would recommend contacting HMRC in advance of making such a claim, as they are likely to flag it for investigation without significant context being provided.
Great video with very clear explanations!
Would be great to know more in details what's the approach to use if my "WFH" is not a dedicated room but my actual bedroom. If my share of the rent is, let's say £1000, for my bedroom and shared living spaces, can I divide by 2, assume the bedroom cost is £500 per month, divide that by 30 to get a daily cost of the room, and then divide the result by 3 (8h working out of 24h) and therefore claim that number as rent deduction? Compared to a flat rate of £26pcm its much higher so its confusing to understand if its right or wrong.
£1000pcm rent (total rent is £2000, sharing house)
£500pcm room cost (divided by amount of rooms I am paying for - shared space and my own bedroom)
500/30 = £16.66 per day
£16.66/3 = £5.55 daily claim for the bedroom.
If you could clarify if this method is good or completely wrong it would greatly be appreciated.
Keep up the good work, I'm really enjoying your videos!
Hi Andrea - in theory there is nothing wrong with your calculation - however, please be aware that HMRC may ask you for documentary evidence to support your calculations, which is why some people opt for the flat rate. Will you have all of this documentation to hand?
@@1stformations Thanks for replying - I would have my rent contract stating the rent that has to be paid monthly and I can also extract the bank statements showing the outcome of £1000 (for example) from my bank account to my flatmates, who's sending the whole amount to the agency.
Apologies, I missed out on specifying that the number obtained out of the working hours (the daily rate divided by 3) would then be multiplied by the working days. So if the daily rate of the room is let's say 15£ per day, £5 would be for the 8h worked, and if i did 21 days of work, I would get £105
@@andrealacedelli Thanks for this information Andrew - may we ask if you are self employed and operate a limited company, or if you are employed and paid via PAYE (or both)?
@@1stformations I am currently a Sole-Trader, nothing else as of now - if i were to be PAYE & Sole Trader I would also adjust the math to reflect the effective hours of the freelance business.
Hi - I have a question. As an employee of a company working from home, to claim allowable expenses, I set up a government gateway ID online, do I claim under the self assessment page? Please can you advise, thanks so much
Thanks for the question! To clarify, do you intend to 'Claim tax relief for your job expenses'?
Hi Nicholas - I was hoping to lower my personal tax / claim allowable expenses as an employee of a company (offset against annual tax bill). I set up a Gateway ID and wanted to claim five of the allowable expenses, Mortgage, Heating & Electricity, B-road, Council Tax and Moby whilst working from home for 20 months
@@MrKm1066 Got it. You should be able to claim online (for the expenses you qualify for) via GOV.UK using your Government Gateway ID (see section 2 minutes 45 seconds in the video for Nick's explanation on this).
@@1stformations Thanks again Nic, the main point of interest to me is that I have an interest only mortgage: are you saying that you can claim on this par of your mortgage, on not on the Capital Re payment mortgages?
Best regards
@@MrKm1066 If you rent your home or pay a mortgage, HMRC allows you to claim a portion of that cost as an allowable business expense on your annual tax return. The trick here is that you’ve got to work out how much of your mortgage or rent counts as an allowable expense.
For example, let’s say you’re working from home in a five-room house. For tax purposes, HMRC doesn’t count a kitchen or a bathroom as a room. If you’re using one room exclusively for work purposes, that means you’re using 20% of the rooms in your house for business.
As a result, you can then claim 20% of your annual mortgage or rental costs on your tax return. The exact same rule will then apply to your mortgage interest (but not to capital repayments).
We hope that helps!
Hi, I am a sole trader and have a question regarding utilities claim. I have 2 totally converted old bedrooms into work spaces and a dining room used mainly as office space, but I'm happy to call 50% use. So I have 2.5 rooms for work in a 7 room house, that's 35% work space. Can I then safely claim 35% of my gas, electric, council tax, water and broadband? Thanks for any help.
Thanks for the message. It may be difficult to argue to HMRC that you require 2.5 rooms to work from home (one would be the usual amount). What do you use the 2.5 rooms for and how often are they used for work in any given day?
@@1stformations Thanks for your quick reply. My trade is crafting, one of the ex bedrooms is now my main craft room where I do most of my work. It contains work bench, shelves and materials. The second room is for packing. Contains packing machine, packing materials and some stock. My dining room has the computer for orders and postage. I need all the space that I have created for my work. I understand what you mean regarding how long these rooms are used for, of course I can only be in one room at any one time. I work at least 50 hours a week. I want to do things right in regards to claiming, but I obviously don't want to miss out on things I can claim for. If I can only claim for one room, then that's fine. Many thanks
@@dallaker We would suggest you should be able to claim for at least 2 rooms; however, it may not be worth the hassle (time) of a HMRC investigation if one is triggered for you submitting a claim for this.
How do you sell your crafts?
@@dallaker Thanks for this.
We recommend you should be able to claim for 2 rooms based on what you have cited; however, you should factor in that this type of claim may lead to a HMRC investigation which can be time-consuming and more hassle than it is worth.
Where do you sell your crafts?
@1st Formations I sell all my crafts online. I'm happy to only claim for one room to avoid any unnecessary investigation. So I just need to confirm I'm counting my room count correctly and not including rooms I don't have to, to give me a larger percentage. I've included a large reception hall, living room, dining room, conservatory and 3 bedrooms, totalling 7 rooms. Would I have to include the conservatory? This is all very complex.....Thanks
Hi, If I'm living in a one bedroom apartment and I set up my living room as working space. Can I claim 50% of the rent, bills and council tax? Thank you.
Thank you for your kind enquiry, Jean. In general terms, it would be difficult to argue that the whole of the living room is being used as a workspace. You would probably be able to claim for the living room based on the proportion of time it is in use solely as a workspace. This would probably be around 25% of the time, based on an 8 hour working day and not working on weekends.
How many hours each week do you use your living room as a workspace?
@@1stformations Thanks for your reply. If I have already set up a working space in the living room solely for the purpose of work and it contributes to 1/3 of the total size of the apartment (taking only living room and bedroom into account), can I claim 30% of the rent and bills? Much appreciated for your response.
@@jeant143 It would be unlikely i this scenario. The room would need to be in full use for the period of time you were using the room. Does anyone use the room for anything else while you are working?
@@1stformations No, no one else uses the room for anything else while I’m working. In this scenario, how would be the calculation? Thank you.
@@jeant143 It depends - how many hours a day do you work using the space, and how many days per week?
as a sole trader can I claim my wage??
Can you clarify what you mean by wage?
@@1stformations I ment salary
Hand the money back fullstop non work from home staff got zero the devide is clear hmrc tax these people more
Thank you for your comment. Do you currently work from home?
No you should get nothing,non wfh workers should pay less tax okay and as for the four day workers you should pay more tax then a non four day worker bit you wont you great deviders of unequality liers
Interesting thoughts - I am guessing you work from the office?