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  • Ellie Cooper

What Working From Home Costs Can I Expense To My Business? (Limited Company UK - October 2020)


Are you running a limited company but working from home now due to COVID-19? Or perhaps you run a business from your house regardless of the situation and are looking for a way to save taxes.

Either way, you are probably wondering what you can expense to your business?

This article will run you through three different ways you can expense your at home costs to your company.




Fixed Expense

This is the simplest of calculations, as it is just one fixed rate regardless of the size of your company. Essentially, you can send yourself £26/month as a work from home allowance, and this amount does not have to be on your self-assessment, but does get deducted from your revenue meaning, you don´t pay tax on this amount anywhere!

Of course, it’s not a large amount, but it’s better than nothing. It is also completely bureaucracy free, meaning you can start doing this today.

Proportion

The next way is calculating a proportion of your at home costs that you spend on business related activities. There are a few rules here:

· You cannot expense any fixed costs of your home, i.e. you can’t get your business to pay for your mortgage, or capital refurbishments in your house.

· You can only expense your telephone & broadband if the account is in the companies’ name

· You must calculate the % of your house being used for business, which is usually calculated either by meters squared, or bedrooms, depending on what makes the most sense.

Legal Contract

This is a written up, official contract, between yourself and your business. This will state that you business rents out space in your home. Please keep in mind, this must be within the market rate.

Once the contract is set up, you invoice your own business for the fee per month/quarter/year, and the company will pay. You will then have to declare this rental income on your self-assessment.


--------------------------------------------------------------------------------------------------------------------------- Think that this may be something you are interested in? Want to find out more? Book a quick call with us here and we can go through your options within our free review of your books.




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