Self-employed and working from home

April 2007

HMRC have now revised their guidelines for self-employed persons working from home and claiming for the cost of using a home office.

Prior to the new guidelines, which effectively apply from the 6 April 2005, the Revenue could challenge claims for the business use of home facilities unless the area allocated to business use was used exclusively for business purposes.

They have now conceded that:

"If an expense is incurred for more than one purpose, we will not prohibit a deduction for any identifiable proportion of the expense which is incurred wholly or exclusively for the purposes of the trade."

So if you had a spare bedroom set up as an office, and part of the time it was used as a business facility and at other times as a place where your children did their homework, then you would be allowed to claim for the identifiable costs when it was being used as a business office.

But beware - if the room has two desks one of which is used for business, and at the same time the other is used for non-business purposes, then tax relief could be denied!

HMRC have also accepted that an estimated £2 per week is a reasonable cost for the business use of home facilities - this is now in line with the £2 a week that can be claimed by employees working at home.