A survey by FreeAgent shows large numbers of self employed people don’t claim all their expenses, particularly the smaller ones, but they all mount up. FreeAgent also gives advice on what self employed people can claim if they work from home.
A new survey shows less than a quarter of self employed people claim all their business expenses.
The survey of 2,000 self employed people by FreeAgent, who provide cloud accounting software, found less than a quarter (20.5%) claim all of their business expenses.
57.3% who won’t typically claim business expenses that are up to £10, meaning a minimum of £24 million is lost annually on unclaimed expenses.
44.2% who do not claim back coffee during the year
36.8% who don’t claim food back when they are travelling for work and 17.2% who don’t claim back accommodation when travelling for work.
That all mounts up to a lot of money. The survey also showed that a lot of self employed people will have left it till Christmas Eve or even Christmas Day to do their expenses. FreeAgent has some advice below on the big ticket items you can claim if you work from home, but says that it is important to also tot up the smaller claims as that may amount to more than you think.
The first thing to decide is what proportion of bills you can claim if you work from home. You can either use a flat-rate method if you are a sole trader or an individual within a partnership of individuals or an actual costs method. For instance, if you are claiming on utility bills, FreeAgent says the best method is to work out how many rooms you have in your home, identify how many of those rooms you use for your work, then calculate exactly how much time you actually use these rooms for business.
Armed with these methods for calculating your business use of home, here are a few of the expenses you can actually include in your accounts:
For more help, check out Freeagent.com’s infographic about claiming working from home expenses for sole traders. However, if your business is a limited company – or if you’re thinking of changing to this structure in the future – bear in mind that the rules are slightly different, so check out Freeagent.com’s other infographic specifically for limited company directors.
Remember that claiming costs of working at home is not as simple as it initially sounds – so if you’re in any doubt as to what you can claim, you should seek further advice from an accountant.