December 4th, 2019

The Jonathan Ford & Co Advent Calendar – Day 4


Over the course of the festive season we’ll be bringing you an advent calendar’s worth of tax and financial tips.  Some of them might even be a little Christmassy!  On day 4, sole traders working from home really need to consider…

Claiming use of home as office

Sole traders seem to be excluded from a lot of good tax saving tips but we have a few suggestions in the pipeline to get their festive spirit flowing, starting with this one.

The amount that can be paid to an employee or director of a company for working from home can be calculated in one of two ways:

  1. A flat rate of £4 per week; or
  2. The business use proportion of the incremental household costs

The calculation in (2) usually gives really low results.  This is because any fixed costs, such as mortgage interest, rent, insurance and utility standing charges, cannot be included in the calculation.  So employees are pretty much limited to £208 per year.

Sole traders can claim either:

  1. A flat rate according to the number of hours worked from home per month; or
  2. The business use proportion of household costs

Notice the key difference?  Yes, that’s right, there’s no requirement to limit household costs to just incremental costs.  This means mortgage interest, rent, insurance and the full cost of utilities can go into the calculation.

For sole traders that perform a large part of the work from home, it is not uncommon for a use of home as office claim to be worth many hundreds, sometimes thousands, of pounds, leading to some quite considerable tax relief.

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John manages a wide portfolio of owner managed businesses and oversees the smooth operation of the firm’s payroll department.

After obtaining his degree in mathematics from the University of Liverpool, John joined Jonathan Ford & Co in 2004 and qualified as a chartered accountant four years later. John likes to keep abreast of developments in tax and accounting and is responsible for the mentoring of junior staff.

Outside of work, John enjoys powerlifting and is a Liverpool FC season ticket holder.

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