Guides
How to claim tax relief if you’re working from home due to COVID-19
23 October, 2020 · 2 mins
Working From Home Tax Relief calculator 2024
Calculate work from home expenses for filing your Self Assessment Tax Return to HMRC
If you’re a sole trader working from home, you can claim back some of the costs you incur, like council tax, heating, lighting, phone calls and broadband when you file your Self Assessment Tax Return. We’ve made a calculator to help you calculate what you can claim back.
Note: we’ve made some assumptions to make the calculator formula work for most cases. See the full list of assumptions under the calculator.
Fill in the information about your home office
Describe your home office
Provide a reasonable description of the spaces at your home that you work from. Keep in mind that you need to be able to explain your reasoning to HMRC if they decide to contact you to check your self assessment report.
About your property
For the number of rooms, count every separate room you have that can be described as a “normal living space”. This includes a living room, a kitchen, the bedrooms – but doesn’t include bathrooms and toilets.
Number of rooms
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Number of days a week you work from home
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Average hours worked at home per day
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About your monthly outgoings
Fill in any regular expenses you pay for your home – electricity, gas, rent or mortgage, and anything else. Add or remove the missing or not applicable expenses.
Percentage of rooms used for your business
How much of each of the rooms’ space do you use for your business? If you don’t use a room for business, leave the value at 0%
How do I calculate the correct percentage?
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Total percentage of your home used for your business
The estimated monthly cost to your business
This is how much you can claim tax relief on based on the information you’ve entered.
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Assumptions for using the calculator
Only for use where rent is charged from 6 April 2023 – all costs are for the period starting from the beginning of your personal tax year You regularly work at home You work the same amount of hours each day on average Your rooms are proportionate to each other
This is only a guide, so please contact us if you have any questions.
This is only a guide, so please contact us if you have any questions.
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What can I claim for as a sole trader working from home?
As a sole trader working from your home, you can claim tax relief for a portion of your household bills that are used for your business. This includes costs such as:
- Council tax
- Mortgage interest or rent
- Insurance (if there’s business equipment insured under that policy)
- Repairs and maintenance
- Utility bills (like gas, electricity)
- Internet and telephone use
You can't claim for the parts of these bills that are used for private or domestic purposes. For example, if you use a room in your home as an office for 30% of the time, you could only claim for 30% of the heating costs attributed to that room.
There are two different ways of calculating how much you can claim: the simplified method and the actual cost method.
What is the ‘Simplified Method’ of calculating Working From Home Tax Relief?
The Simplified expenses method involves using flat rates for business use of your home, based on the hours you work at home each month. This method is straightforward but may not reflect your actual costs. It might mean a slightly smaller tax saving than the method our calculator is using – this is called the ‘Actual Cost’ method.
What is the ‘Actual Cost’ method?
The Actual Costs method involves calculating the actual proportion of your home used for business and the proportion of time it's used for business, then applying that proportion to your actual bills.
For example, if you have a 4-room house and you use 1 room as an office for 50% of the time, and your electricity bill for the year is £400, your claim as a business expense might be £400 * 1/4 * 50% = £50.
Bathrooms are included in the total room count of a house when it comes to the calculation. For example, in a 3 bedroom house, with one kitchen, one bathroom and one toilet, the total room count would be 6.
Obviously these sums can get a bit complex when you are working out multiple different expenses, (and may result in unpleasant school maths lessons flashbacks!!) which is why we’ve made it easy for you with our Working From Home Calculator for Sole Traders.
We’ll help you do the maths for your claim, but just remember to keep records of all your expenses and evidence of the business proportion used, as you may need these if HMRC asks for them.
How does ANNA's Work From Home Calculator for Sole Traders work?
We ask you a few basic questions about your outgoings and then hey presto, by the power of maths you’ll instantly see the estimated amount we think you’ll be able to claim back.
So you can get all the information ready, here’s what we’ll ask for:
- We’ll ask you about your property:
- How many hours worked at home per day
- The number of days you work per week
- The number of rooms
- We’ll ask you about your monthly outgoings:
- Mortgage interest or rent paid per month
- Electricity bill
- Gas bill
- Council tax bill per year
- Phone (landline and mobile) and internet costs/year
- Buildings and contents insurance/year
- Building maintenance and repair/year
- Cleaning and cleaning services/year
- We’ll ask you what percentage of each room in your house you use for your business – you just enter or adjust the percentages.',
- Then let our calculator do the work and you’ll see the estimated amount we think you’ll be able to claim back.
What is the ‘Actual Cost’ method?
Use your best judgement to provide a reasonable estimation of how much of the room’s space you use for your business – or how much time spent in the room (kitchen, for example) you spend on doing your business.
Remember: there is no way to be absolutely accurate with these estimations, but you have to be able to explain your reasoning to HMRC in case they want to audit how you calculate your work from home expenses.
Examples:
- If you own a catering business and sometimes use your home kitchen for trying out recipes, you might say that 15% of your home kitchen is used for your business needs.
- If you’re a photographer and have a separate studio room and and a dark room at home – and you don’t use those rooms for anything else – then each of those rooms is 100% business.
- If you live in a studio apartment and have a designated home office area, a rough percentage of the room’s area will be the one you indicate as used for business.
How do I claim working from home on a Self Assessment Tax Return?
To claim working from home expenses on a Self Assessment Tax Return as a sole trader, you need to include these costs as part of your business expenses.
Here's how to do it:
- Identify and calculate your allowable expenses using our calculator.
- Fill out your Self Assessment Tax Return: Include your calculated expenses in the 'business expenses' section of your Self Assessment Tax Return. If you're using the online service, this is in the 'Your self-employment details' section under 'Allowable expenses'. If you're using the paper form, this is in the 'Self-employment (full)' section under 'Allowable expenses'.
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