If your company is based at home or you perform duties as a director from home, then you may consider expensing your home office costs.
If your company is based at your home, or you perform a substantial amount of your fee earning duties as a director or as a company employee from your home, then you may consider charging your company for the use of a home office.
What we suggest
If you genuinely undertake substantial fee earning work from home, then we suggest you establish a license agreement with your company, and rent your home office space out to your business (see Option 3). If you carry out only administrative duties from home, then we suggest you charge your company the HMRC agreed home office rate of £26 per month (see Option 1).
As a quick summary there for three options for you:
Option 1 – £6 per week
If you work from home from time to time, or carry out administrative duties from home, you can claim £6 per week from your business to cover the running costs associated with working from home. There is no need to keep receipts for this.
Option 2 – Home office running costs
If you feel Option 1 does not adequately reflect the true costs you incur in working from home, then this option may work better for you as it will reimburse you for your actual home running costs. On the upside, you will get a larger tax deduction for your company if your costs are higher than Option 1, and on the downside there is more onus on you to keep good business records relating to these costs.
Option 3 – License to rent your property
If you genuinely undertake substantial fee earning work from home and need a dedicated space within your home to do this, then a non-exclusive rental license will enable you to claim the costs in Option 2 above, AND also a proportion of your rent/mortgage costs. On the upside, you will get a larger tax deduction for your company than for Option 1 or 2, and on the downside there is even more of an onus on you to keep good business records relating to these costs.
You can find a more detailed guide here, along with the templates you will need if you decide to use Option 2 or Option 3 above. What we suggest is you complete any applicable templates and then send signed copies back to your account manager. The documents will then be stored in your company file for future reference.
If after having a read of our guide you have further questions, please feel free to email or call your account managers.