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bigduckontax, Accountant
Category: Tax
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Hi, I am a freelance artist and illustrator and I work from

Customer Question

Hi, I am a freelance artist and illustrator and I work from home. I would like to know how to work out what I can claim as expenses in terms of living in the place I work (which is my home which I own) for my self assessment tax return.
For example I have worked out I can claim 20% of my gas and electric and a percentage of the business calls. I am however unsure how much or what I can claim in terms of broadband, insurance, water, council tax and mortgage interest?
I record all my day to day living expenses it is just the crossover of living in the place I work where I am not sure what or how much I can claim against.
Any help would be much appreciated.
Thank you,
Zoe
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
You will find this Gov UK website helpful:
https://www.gov.uk/expenses-if-youre-self-employed/overview
However, to summarise the following are the more common expenses allowable against tax:
'Costs you can claim as allowable expenses
These include:
Office costs, eg stationery or phone bills
Travel costs, eg fuel, parking, train or bus fares
Clothing expenses, eg uniforms
Staff costs, eg salaries or subcontractor costs
Things you buy to sell on, eg stock or raw materials
Financial costs, eg insurance or bank charges
Costs of your business premises, eg heating, lighting, business rates
Advertising or marketing, eg website costs'
Working from home would attract the following allowable expenses:
'Working from home
If you work from home, you may be able to claim a proportion of your costs for things like:
Heating
Electricity
Council Tax
Mortgage interest
Internet and telephone use
You’ll need to find a reasonable method of dividing your costs, eg by the number of rooms you use for business or the amount of time you spend working from home.
Example
You have 4 rooms in your home, one of which you use only as an office.
Your electricity bill for the year is £400. Assuming all the rooms in your home use equal amounts of electricity, you can claim £100 as allowable expenses (£400 divided by 4).
If you worked only one day a week from home, you could claim £14.29 as allowable expenses (£100 divided by 7).'
As opposed to all the palava of keeping extensive vouched records of all expenditure you could use the simplified version for certain costs which you will find here:
https://www.gov.uk/simpler-income-tax-simplified-expenses
Here is a very basic explanation:
'Types of expenses
You can use flat rates for:
Business costs for vehicles
Working from home
Living in your business premises
You must calculate all other expenses by working out the actual costs.'
However way you proceed record keeping is essential to head off a possible future investigation into your tax affairs. I personally have suffered a VAT Inspector demanding to see a voucher for 13 pence, yes 13p, of input tax reclaimed!
I do hope I have shown you the way forward with your question. Don't hesitate to follow up if you think I have not covered everything.
Customer: replied 2 years ago.

Hi Keith,

I already knew all that as I have read the Gov UK site extensively. I guess I needed to confirm it for my personal circumstances. So basically I CAN claim for Heating, Electricity, Council Tax, Mortgage interest, Internet and telephone use as I work from my house.

I just need to work out how to divide my costs which is straight forward enough for heating, electricity, internet and phone use.

I am unsure how to work out council tax and particularly how mortgage interest works or what I am allowed to claim for? I just need a bit of guidance to make sure I get it right. As you said don't want to get stung later!

This is the first year I have gone over the tax threshold for my earnings in my freelance business so trying to account for everything. I keep receipts for all expenses so that is not a problem.

Zoe

Expert:  bigduckontax replied 2 years ago.
Right Zoe, mortgages: only the interest element of repayments are allowable against tax, but claimed proportionately. Council tax you claim on the same basis.
To get the proportions, and you only have to do this once, you would, say, work out the floor area of the room you use and the total ditto for the residence, excluding hallways, bathrooms, kitchens. utility rooms etc and that is the proportion to claim. You see my bias there, I started working life as a trainee valuation surveyor with the old London County Council! The government web site just says room used over number of rooms. It's all a rough and ready twist of the spoon to stop the treacle running off so to speak. You then factor in the number of days in the week the room is used for business purposes. You then have a proportion figure to calculate business expenses as a fraction of the total. eg one room out of 5, sq ft of room 100, total sq footage of all rooms say 500 so one fifth is the fraction to use. Then if used 5 days out of seven the factor 5/7 in to get a final figure of 14% of total apportioned costs to set against business profits. Simple, as the mercat in the TV advert would say!
With luck these expenses will bring your net profit below your Personal Allowance.
Customer: replied 2 years ago.

Brilliant! Thank you that is exactly what I needed to know. I can sit and hopefully work it all out now.

Thank you,

Zoe

Expert:  bigduckontax replied 2 years ago.

Delighted to have been of assistance, Zoe.

Please be so kind as to rate me before you leave the Just Answer site.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3613
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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