What sole trader expenses can I claim back working from home? Free Sole Trader accountancy and expenses advice.
It’s a well-known fact that as a sole trader expenses can be deducted when you work from home. Sole trader expenses include gas and electricity and so on. But is this really a fact? Yorkshire Accountancy can provide free sole trader accounts and expenses advice.
The truth is that tax law allows a sole trader expense such as electricity to be deducted only if it is used ‘wholly and exclusively for the purposes of the trade’. This does not mean that you need a separate bill for the sole trader business, or that you need to have a separate office within your home that is not used for any other purpose other than your business (such as a spare bedroom, for example).
What it does mean is that when the area of the home that is used for the sole trader business is being used as an office or admin area, then nothing else ‘non-business related’ can be happening there at the same time. If it does, then you cannot claim any sole trader expenses back.
So, if your home office is solely that during your business hours, and no one else can use the room whilst you are in it, then you can claim back some sole trader expenses. The deductions are only available if you work in that area for more than 25 hours per month, however. The deductions are worked out on an hourly basis, so the more hours you spend wholly and exclusively at work, the more you can claim back. ‘Work’ in this instance comprises of ‘core business activities’, which include providing goods and services, admin work, and marketing.
Between 25 and 50 hours will gain you £10 per month expenses. 51 to 100 hours is £18 a month. And 101 hours or more is £26 a month. Please be aware that if there is more than one person working in the business, and they both live at the same home, only one deduction can be made. Equally, if there are two homes that are used for the business then they are seen as one home when working out the deductions.
For more comprehensive sole trader expenses and accountancy advice advice, please contact us.