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Are you claiming the right office-based expenses?
11 December 2024

Claiming allowable expenses when calculating taxable profit as a self-employed business owner is an important step in preparing your tax return.

It will ensure you are not paying more tax than you need to and help mitigate some of the costs of running your business.

If you work from an office or use one in the course of your business activities, there may be more scope for claiming allowable expenses than you think.

Office-based expenses

For some items, you can claim allowable expenses straight away, including items you would normally use for less than two years, or bills that normally cover a period of less than two years, such as:

• Rent and utilities
• Business rates
• Property insurance
• Stationery
• Phone and internet bills
• Postage
• Printing

For other expenses, what you can claim depends on the type of accounting you use.

If you use cash basis accounting, you can claim items such as computers, long-term software or repairs to your business premises as allowable expenses.

However, if you use traditional accounting, you should claim capital allowances for these longer-term items. This is usually applicable to sole traders or partnerships earning over £150,000 per year.

Home offices

You may be able to claim for a portion of costs such as heating, electricity or rent if you use part of your home for your business – although you will need a reasonable method of working this out.

For example, if you have six rooms in your house and use one as an office five days per week, you may be able to claim for a portion of the electricity costs.

With an electricity bill of £600 per year, you can claim £100 as reasonable expenses (assuming all rooms in your home use equal amounts of electricity). You work there five days per week out of seven, so you can claim £71.45 as expenses.

This will help to reduce the cost to you and your family of using your home for business.

Make sure you claim all expenses applicable to your office to ensure that you optimise your tax position and draw as much financial benefit from your business as possible.

For advice on claiming allowable expenses for office costs, please contact our team.