What expenses can self employed people claim?

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.

Employee using a calculator and notepad


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.

This includes:

  • 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.

What can you claim if you work from home?

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:

  • Mortgage –If you’re buying your home through a mortgage, you can only claim a proportion of the interest you pay – not the capital repayment.
  • Rent You can’t charge your business rent when you’re self-employed, because legally you are the business. But if you’re renting your home from a landlord, then you can claim a proportion of the rent for your business.
  • Council tax HMRC allows you to claim a proportion of your council tax. However, depending on how much you use your home for business, it’s important to remember that you may actually have to pay business rates rather than council tax.
  • Telephone and broadband – Remember that what you can claim for your telephone and broadband is not apportioned on the basis of the number of rooms in your home, but on what your actual usage of the line is. You can claim the full cost of all your business use of the line and a percentage of the line rental, based on how much you use it for business purposes and how much is for personal use.
  • Light and heat –You can claim the business proportion of your gas and electricity costs for lighting and heating in the room(s) you use for business. Remember, if you’re claiming the flat rate allowance, leave this out because the allowance covers it.
  • Property repairs If a property repair relates solely to the part that’s used for business, you would include this cost in your accounts in full, subject to the business use of that room. That means: In the 10-room house, if the window in the room you use for work was repaired and that cost £200, you wouldn’t need to divide that by 10 (the total number of rooms), because the repair was only for that particular room. You’d only have to multiply it by 90% (as you use the room 90% of the time for work) and include £180 in your accounts. If the repair was to the whole house, for example if the roof needs fixed, you can include that in the same proportion as you would the rent or council tax – so in the example of the 10-room house, the repair cost x 1/10 x 90%.If the repair is just for a part of the house that’s not used for business – such as a kitchen floor – then you can’t claim any part of that repair in your business accounts.
  • Water Unless you use a significant amount of your home water supply for business purposes – at which point you’d need to apply to the water company for your business use to be separately charged so you can claim the full cost – you won’t be able to include minor water usage 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.

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