Use of Home as Office claim in Company Accounts
Please note we recommend to clients that they do not claim the mortgage interest, insurance costs and home telephone line rental under “use of home as office”. It is still very rarely they do investigate this item but we are erring on the side of caution with our advice!However, we recommend you draw a minimum £300 per year on the basis we do not know of a single case where the Revenue have challenged a claim up to this value.
The stipulated minimum from the Revenue is £4 per week from 6/4/12. This was originally £3 based on the Finance Act 2003 where an employer can pay an employee £3 pw for the extra costs of working at home without tax implications and without the need for any proof of those additional costs. As a director/shareholder/key worker, you can of course claim more than this but should then have proper calculations to back it up (to calculate accurately, add up total household bills – electricity, gas, council tax, cleaning, and rent (if paid!) – and divide by the number of rooms in the house (if you use a dedicated room for business purposes – if used 50% for business purposes, half the room cost, and so on). You will need to exclude bathrooms, WCs and entrance halls from the total rooms.
NB It is not an expense of the worker/Director of the Company; it is rather a rental by the owner/occupier of premises to another legal entity i.e. the Company for being allowed to use the actual space on the premises to house the Company assets and records and where to work on at least the administrative side of running that Company. If this space was not available to the Company you would point out to HMRC that you would need to use serviced offices or rent your own business premises probably at a much higher cost.You can set up a formal rental agreement but it is debatable whether or not a tax inspector would accept a significant increase in reclaimable amount via this route.