Number of hours worked per month |
Applicable amount |
25 or more |
£10.00 |
51 or more |
£18.00 |
101 or more |
£26.00 |
The number of hours worked in a month is the number of hours spent wholly and exclusively on work done by the person, or any employee of the person, in the person’s home wholly and exclusively for the purposes of the trade.
Example1 – Working out the monthly deduction
John worked 60 hours per month from home for a period of 10 months, and worked 110 hours per month during two particular months. He can claim the following amount against his income for tax purposes:
10 months x £18.00 = £180.00
2 months x £26.00 = £ 52.00
Total amount claimed = £232.00
Living at your business premises
Some businesses use their business premises as their home (e.g. guesthouses). If you use premises mainly for business but also for private use, you may, instead of making the standard deduction outlined above, make a deduction for the non-business use. The allowable deduction will therefore be the amount of the expenses incurred, less the non-business use amount.
The non-business use amount is the sum of the applicable amounts (see below) for each month, or part of a month, falling within the period in question (usually the tax year). The applicable amounts are as follows:
Number of relevant occupants |
Applicable amount |
1 |
£350 |
2 |
£500 |
3 or more |
£650 |
A ‘relevant occupant’ is someone who occupies the premises as a home, or someone who stays at the premises otherwise than in the course of the trade.
Example 2 – Rita runs a guesthouse
Rita runs a guesthouse and also lives there all year round with her husband. Her overall running costs are £10,000. She can claim a flat rate deduction for private use as follows:
12 months x £500 per month = £6,000
Expenses claimed against income £10,000 - £6,000 = £4,000
How do I claim?
Keep records of business miles for vehicles, the number of hours worked at home, and details of people living at the business premises over the year. At the end of the year, work out how much can be claimed and include these amounts on your self-assessment tax return.
Practical Tip:
You don’t have to use simplified expenses. You can decide if it suits your business. HMRC provides a simplified expenses checker, which can be used to compare what you can claim using simplified expenses with what you can claim by working out the actual costs. The checker can be found online here.