What Can I Claim for Working at Home as a Freelancer?

a freelancer working from home wondering what can I claim for working at home as a freelancer?

What Can I Claim for Working at Home as a Freelancer?

Working from home as a freelancer offers you flexibility, freedom, and – let’s be honest – the joy of working in your pyjamas. However, many freelancers miss out on valuable savings by not claiming the full range of home office expenses you’re entitled to.

If you are wondering what can I claim for working at home as a freelancer, and you’re not sure where to start or are confused about the rules, don’t worry – you’re not alone!

At IN Accountancy, we specialise in helping freelancers and small businesses make the most of their tax claims.

In this article, we will answer all your questions about claiming expenses when working from home and highlight the differences between what and how you can claim depending on whether you’re set up as a sole trader or a limited company.

Whether you’re just starting out or have been freelancing for years, let’s make sure you’re not leaving any money on the table! 💷

What expenses can I claim while working from home?

When you work from home, you’re entitled to claim a portion of your household costs related to your business.

Here are some common expenses freelancers may be able to claim:

  1. Utility bills – Gas, electricity, and water for your workspace.
  2. Rent or mortgage interest – If part of your home is used exclusively for work, you can claim a proportion of your rent or mortgage interest.
  3. Council tax – A percentage of council tax based on the space you use for work.
  4. Internet and phone bills – Any costs for phone calls or internet use related to your business.
  5. Office furniture and supplies – Chairs, desks, and office equipment bought for your business.

It’s important to note that you can only claim the portion of these costs that directly relate to your business. You can work this out by tracking the time you spend working from home or by measuring the area of your home used exclusively for business. Just ensure your method is logical, consistent, fair – and backed up by accurate records.

What’s the difference between sole traders and limited companies?

The way you claim expenses as a freelancer differs based on whether you’re a sole trader or a limited company, and we have highlighted some of these differences below 👇🏽

Sole Traders:

As a sole trader, you can claim expenses that are directly related to running your business from home. Here’s what you can claim:

  • Household bills: A portion of your gas, electricity, water, rent, or mortgage interest based on how much of your home you use for work.
  • Council tax: A share of your council tax based on the space and time you use for work.
  • Phone and internet: If used for business, you can claim back a percentage.
  • Office-related expenses: Any costs for home office equipment, like desks, computers, or chairs.

Sole traders have two ways to claim home office expenses:

  • The flat rate method: HMRC offers a simple way to claim, allowing you to claim a set amount based on how many hours you work at home. For the 2024-25 tax year, the rates are:
    • 25-50 hours: £10/month
    • 51-100 hours: £18/month
    • Over 101 hours: £26/month
  • The actual cost method: This is where you calculate the actual business portion of your household bills. It’s more accurate but requires more paperwork and number-crunching.

Limited Companies:

For freelancers operating as a limited company, the process is slightly different because the company is a separate legal entity. Here’s what you can claim:

  • Renting a home office space: If part of your home is used exclusively for business, you can charge your company rent. This requires a formal rental agreement between you and your company, and the rent must be declared on your personal tax return, so it’s not necessarily that tax-efficient to do so.
  • Utility bills: You can claim a proportion of your household utility bills, just as you would if you were a sole trader. However, this requires accurate recordkeeping.
  • Broadband and phone: If the broadband or phone contract is in your company’s name and used for business, you can claim the full cost. For shared personal/business contracts, only business use can be claimed.
  • Home office equipment: The company can purchase office equipment for you, which can be claimed as an expense.

For limited companies, HMRC allows you to claim a flat rate of £6 per week if you work from home. This is a simple method that doesn’t require receipts or detailed calculations, making it a hassle-free option, but is instead of claiming the proportion of utility bills outlined above, not in addition to these.

How do I calculate running costs when working from home?

Claiming expenses while working from home isn’t complicated, but it does require accurate records. Here’s how to ensure you’re claiming correctly:

  1. Keep a log of working hours – Track how many hours you work from home each week, as this will determine how much of your household expenses can be claimed.
  2. Work out the proportion of your home used for business – If you work in a dedicated office, this is straightforward. If you work in shared spaces like your living room, you’ll need to calculate how much of the space and time is used for business.
  3. Decide whether to use the flat rate or cost method – For both sole traders and limited companies, the flat rate method is the simplest. However, the cost method can save you more if you have high household bills or spend a lot of time working from home.

Can I claim if I rent my home?

Yes, whether you’re a homeowner or rent your property, you can still claim a portion of your rent (or mortgage interest for homeowners) for the space you use to run your business. Sole traders can claim a portion of the rent based on the time and space used for work. Limited company directors can charge rent to their company, but this requires a formal rental agreement, and the rental income must be declared on your personal tax return.

What if I only work from home half of the time?

No problem! Even if you work from home part-time or split your time between a co-working space and home, you can still claim. You’ll just need to adjust your claim accordingly. For example, if you work from home three days a week, that’s about 43% of the working week, so you’d claim 43% of your relevant costs.

Why should I consult an accountant for freelancers?

Freelancers often miss out on potential savings because they don’t know what they can claim. This is where a trusted accountant can make a real difference.

At IN Accountancy, we specialise in helping freelancers maximise their tax savings. We’ll help you understand which expenses you’re entitled to claim, whether you’re a sole trader or limited company, and guide you through the complexities of HMRC regulations.

Getting expert advice means you’ll avoid common mistakes and maximise the deductions available to you – giving you more time to focus on growing your business!

Whether you’re a sole trader or limited company, IN Accountancy is here to help you make sense of your home office expenses and maximise your savings.

Contact us today to see how we can help you claim everything you’re entitled to.

IN Accountancy are expert accountants for freelancers offering more tips and support around taxes for freelancers.

Let’s make sure you’re keeping as much of your hard-earned money as possible! 💼✨

For more detailed information on working from home expenses for sole traders, check out the HMRC guidance here.

Or if you are operating through a limited company, you can read the Government’s legislation on homeworking expenses and benefits here.

 

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