SOLE TRADER – HOME EXPENSES FAQ'S

By law, an expense is allowable as a deduction only if it is incurred ‘wholly and exclusively’ for business purposes. It doesn’t have to be billed separately nor does the part of your home have to be set aside permanently for business. For example, you can claim for allowable expenses for a room used as your office during work hours, but it must not be used for other purposes during that time.

Not necessarily. People organise their businesses differently, so there is no fixed proportion of costs allowable for particular types of business. That said, the amount you seek to deduct as an allowable expense is expected to be similar to someone running a similar type of business in similar circumstances.

Area – how much of your home is used for business purposes? Usage – how much is consumed (eg where there is a metered/measurable supply such as electricity, gas or water). Time – how long is it used for business purposes.

Where used wholly and exclusively by your business, yes, a proportion of the amount you pay is allowable. Obviously, that proportion will be determined by how much power your business consumes in your home. Some businesses use far more than others. A proportion of water charges are also allowable.

If used wholly and exclusively for business, yes. If used partially for business, a suitable proportion is allowable. An itemised bill will help when it comes to working out the cost of business calls made. Some of the monthly charges you pay to telephone/broadband providers is also allowable.

If you have separate business cover, this is allowed in full, but no part of your household policy is allowed in that case. If you don’t have separate business cover, a suitable proportion of your domestic insurance is allowable.

An appropriate proportion of your council tax bill is allowable, if part of your home is used exclusively for business some or all of the time.

If part of your home is used solely for business some or all of the time, a proportion of the mortgage interest you pay is allowable. Repayments of capital are not allowable.

Part of the rent you pay to a landlord is an allowable expense if part of your house/flat is used solely for business purposes for a proportion of the time you work. A sole trader cannot charge a separate rent to their business, because you cannot rent a property to yourself.

Yes, if you operate your business from your home some of the cost of general household repairs and maintenance is allowable. That might include redecoration of the exterior of the building or roof repairs. If a room is used solely for business, redecoration costs are wholly allowable.

If you mean having an extension built or fitting a new kitchen, as examples, no, neither is an allowable expense.

You can still claim deductions for allowable expenses generated when part of your home is used solely for business. A home-based office used for administration purposes is a common example.

You can get advice on allowable expenses if you are self-employed (including expenses incurred if you use your home for business such as premises, utilities, telephone and internet expenses) from the HM Revenue & Customs website. We can also help you understand the essentials and help you claim all the expenses you are entitled to.