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Claiming tax relief

When running your own business from home there are a number of items you can claim tax relief for. It is important to claim all tax reliefs in order to maximise your income.

Tax relief is available for the following household expenses that have to be paid if working from home:

•    Electricity and Gas costs - for the area you use for working within your home

•    Business telephone calls and internet – these costs should be itemised or calculated as a proportion

•    Computers, bookshelves etc – either a capital allowance deduction going forwards or, while it’s still around, the Annual Investment Allowance

•    Car usage – a percentage of tax relief is available based upon how much business use is incurred. In addition a percentage of the 18% capital allowances may also be available on the vehicle, based upon the percentage of business use.

•    Mortgage interest, household insurance and council tax – calculated as a proportion by floor space, number of rooms or usage, but remember that if you use part of your house exclusively for business it could become liable for business rates, and capital gains tax when you sell it

•    VAT is often overlooked but once your turnover exceeds or is expected to exceed £70,000 you must register with HMRC. You can also make what is called a voluntary registration below this turnover level, but in this case you will need to charge VAT on your invoices

Important Reminder - Make sure you keep complete and up to date records as doing so will save you time and more money later on, as and when your business grows.

Re: Tax reliefs when working from home

This is a great help, thanks. I had no idea I could claim for council tax and mortgage interest so this knowledge has instantly saved me a couple of hundred pounds. Great stuff! 

- JSB