Two of the UK’s most fertile areas for home-based start-ups have been warned not to miss out on valuable money-saving tax breaks to ensure their ‘at-home’ businesses continue to thrive, rather than just survive.
Appealing to Wandsworth and Cornwall, a leading body of accountants signalled that their enviable title to each have among the highest proportion of home-based start-ups in the UK could be solidified if such residents use tax relief.
In fact, figures cited by the Association of Certified Chartered Accountants estimate that there are 356,823 home businesses in London, with Wandsworth having 32,840 of them – equal to almost a fifth of the borough’s total workforce.
Similarly, the figures show that that there are 254,377 home business owners in the South West, with Caradon having among the highest percentage, where 20% of its workforce are ‘at-home’ businesses.
The ACCA’s head of tax, Chas Roy-Chowdhury, reflected: “The rise in start-ups from the home is good news for the economy, but whether these home-based entrepreneurs are aware that, for example, they can deduct tax for the electricity they use in the room where they do most of their work is another matter.
“Unless you are trawling through HM Revenue & Customs website, you may not know that even costs of hiring a cleaner can be deducted from your tax bill for the work they have done in the ‘business room’ of your home.”
As well as on such cleaning costs, tax relief is available to home-based business owners on electricity, water, heating and even decorating expenses. In some circumstances, house repairs can be tax deductable too.
But home-based start-ups were advised to look before they leap into claiming.
“It is not always straightforward and it will not always be clear what can and cannot be allowed,” said Mr Roy-Chowdhury. “Getting it wrong could land you in hot water with HM Revenue & Customs, so it’s worth going over what is allowed and what isn’t”.
Editor’s Note: Further Reading –