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Simplified Expenses (Working From Home Allowance)

Before simplified expenses, when considering using your home as an office, the standard approach would be to work out the floor space of your home office (if you have a defined ‘business room’, e.g. a spare small room in your house), and then proportion the floorspace against your home’s footprint. Then, you have to work out how many days per week you use the room as your office, to get a ‘percentage usage’ of your business against your home bills.

Then, after working out the percentage that your business costs, you would proportion this against your bills for heat, light and power. Remember – some bills don’t cover the ‘financial year’ and things like your electricity statement may be quarterly.

Instead of working out your actual business costs against your residential bills, it can be easier and quicker to use some pre-defined expenses. HMRC have these to avoid confusion for self employed individuals, and to make things, well, simple!

When you consider your home office, this is classed as your ‘Working from home’ allowance. HMRC have the below simplified expenses options for using your home as an office, and can only be used if you work from home for more than 25 hours per month.

Hours of business use per month:

  • 20 to 50 hours: £10
  • 51 to 100 hours: £18
  • 101 or more: £26

These can then be multiplied against the number of months they have applied for.

Example:

Matt has worked from home for 38 hours during April – December and for 58 hours between January to March.

He calculates that:

9 months x £10 = £90

3 months x £18 =  £54

Total he can claim: £144

You don’t need any bills to be kept for this as it is a flat rate calculation. Simply note in your business paperwork the calculation you have used for future reference.

Phone bills, broadband, council tax and rent (or mortgage interest) – you can still continue to proportion these separately – read more here on the UK Gov website

Updated on May 21, 2021

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