Working from home as a Sole Trader? Here is what you need to know about the expenses

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Are you one of the sole traders, who enjoy working in the comfort of their homes. If that is the case, then there are several things to be kept in mind.

An extraordinary aspect of being self-employed is the chance to telecommute. It’s this kind of adaptability that rouses individuals to begin their very own organizations. It’s particularly useful for the individuals who don’t find a nine-to-five office job reasonable, for example, stay-at-home parents or those living with disabilities.

Well if you fall under this category, there is some good news in store for you. Make sure that you claim the expenses of working from home. You’re allowed to incorporate a chunk of the ongoing expenses of the home in your records, which will spare you some tax.

You might be able to claim for a wide range of expenses against your tax bill for using your home as a part-time or full-time office. This depends on the kind of work you do. You can either claim for office equipment like furniture and computers or renting part of your home to your company although you need to be extremely careful only to include genuine costs. However, HMRC rules are quite complex.

What are these certain expenses and how to calculate them will be discussed in the article.

Here are two simple methods for calculating the expenses. Let’s get familiar with them first.

Flat rate: the most straightforward method

This is the simplest method for calculation of expenses that you can claim for being a sole trader. All you have to do is calculate the number of average hours you spend working from home in a month. Furthermore, you are supposed to add a set amount for the number of hours in your tax accounts for using the house for business.

The amount is variable to the hours spent working from home per month.

hours spent working
A look.

Here is a look at it;

For 25-50 hours the amount is £10/month

For 51-100 hours the amount is £18 per/month

For 101 hours or more the amount is £26 per/month

This method can save a lot of time. However, this method only covers expenses for light, power, and heat. You would still have to calculate other costs separately.

Analyzing the costs method

This is another method that you would have to use if the basic accounting method is not eligible for your business. It’s all determined by the kind of business a sole trader is running and the kind of work that is done at home.

For instance, a freelance real estate advisor might spend a few hours in a week researching from home but spend the remaining of the time visiting sites with clients. On the other hand, if you’re working from home as a content writer or video editor. The most significant amount of work you do is from home and involves no visiting or meeting clients.

HMRC requires a reasonably fair allocation of the expenses of working from home between the private and working element for those expenses. Don’t know how to do this? Let’s take an example!


You can count the number of rooms in your house and determine the amount that is being used for work. Then you calculate the time you spend using these rooms doing business.

It is advisable to find a balance between using all parts of your home for business and private purposes. It is never beneficial to use any of the parts solely for one purpose. If any section is exclusively used for business activities, then capital gains tax is going to be applied to that particular part used solely for business in case you are selling your home. So, you should try to make the most out of the space at home by making it serve a universal purpose. For instance, you can partly use the office in the home as a gaming room. To prove it to HMRC, you can put a gaming console in there.

Here are some numbers to help you better understand the method

In a situation where there are eleven rooms in a house, and only one is used for business, you need to calculate the percentage. For instance, 80% of that room is taken up by the business. You will be adding together all the expenses that can be claimed and multiply that by 1/11 and then by 80% to get the figure for your account for working from home.

These were the two methods described in a brief but informative manner. Now let’s take a look at the kind of expenses that you can claim being a sole trader working from home.

Working from home

1. Telephone and Internet

Keep in mind that whatever you guarantee for your phone and broadband isn’t allocated based on how many rooms there are in your house, rather on your real use of the line.

The full expense of all your business utilization of the line can be guaranteed, and a level of the line’s rental. In light of the amount used for business purposes and amount that is for individual personal use.

The easiest method to cost work calls is by having a different work telephone. Nonetheless, on the off chance that you want to simply possess and use the one telephone. Utilize your phone’s call log to precisely know the amount of your telephone bill ought to be credited to work calls.

2. Electricity and gas bills

Being a sole trader, working more than 25 hours a month at home makes you eligible to apply a flat rate method, to calculate your allowable electricity and heat expenses. Now you can’t possibly calculate electricity used by each bulb. For this, you need to figure out how much time is spent using these utilities.

3. Council tax

This considered a business expense if you’re a sole trader working from home for part of the time, and again ought to be worked out proportionately. Nonetheless, depending upon the amount you utilize your home for work, you may need to pay business rates as opposed to council tax.

4. Mortgage and Rent

Being a self-employed sole trader gives you the advantage of claiming a portion of the interest-only if you are purchasing a house through a mortgage.

You can’t charge your business rent when you are a sole trader working from home, because legitimately you are the business. On the off chance that you’re renting your home from a landowner, at that point, an extent of the rent for your business can be claimed.

5. The office

The hardware that you purchase can also be claimed. For example, if you have purchased a laptop or desktop computer, printer, or any other device that you use for business purpose can be claimed. What’s best about this is you can even claim for those expenses that were made. As well as, seven years before the time of you being declared as self-employed.

6. Repairs

Repairs of some specific areas can also be claimed as expenses. For instance, if you renovate your office, then that can be claimed. However, if you furnish your kitchen or dining, it cannot be claimed since it has no direct use to the business. So, only the damaged property that relates solely to the business area in the house can be claimed for expenses.

7. Water

If water is being used in large amounts for the business, then it can be claimed. If the use is only minor, then it is a lost cause.

8. Wheels

If you own a vehicle and use it to deliver products or services, later it can be claimed for expenses by using the simple flat-rate method.

In Conclusion

In Conclusion

The key inquiry to pose to yourself at each stage is: are these expenses really for business purposes? Furthermore, would I be able to demonstrate it?

As ever with such issues, in the event that you have any questions, a certified accountant will most likely be able to assist in the best possible way.

All fusion clients receive extensive access to a group of master accountants who can give the appropriate responses. They likewise have a detailed description and information regarding sole traders on their website. Schedule a meeting today!