Freelancers’ Questions: Can I claim a fixed sum for my home-based office?

Freelancer’s Question: I notice that home-based businesses have been urged not to miss out on possible tax relief and, yesterday, FreelanceUK reported that traders can potentially claim a fixed proportion of expenses for use of their home if it is their office, which it is for me – the only one in fact. Is there any further guidance to help me, a freelancer operating as a sole trader, work out if I can claim this fixed sum of expenses?

Expert’s Answer: The self-employed (or an individual seen as self-employed under the taxman’s guidelines) can claim a proportion of expenses for use of their home as their office, as held under Section 34 of ITTOIA.

Under this approach, a proportion of the total expenses associated with your home as an office can be calculated alongside the amount of usage, so the amount depends on a calculation of the percentage of space and usage, which you can work out. More details of claiming for use of home where the home is being used ‘wholly and exclusively’ for business purposes are available in a section from the website of HM Revenue & Customs.

In the section I refer to, it states: “If part of the self-employed person’s home is set aside solely for business use for a period, they can claim as a deduction the costs they incurred on that part during that period.”

Bear in mind, you should only use this approach/calculation in the event that you are a self-employed person who makes substantive use of their home as an office. In other words, your home as an office is the place where you most often carry out your duties as a self-employed business person.

The expert was Sumit Agarwal, founder of DNS Associates , an accountancy firm serving freelancers and the self-employed.

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