What Business Expenses can you claim if you run your business from home?

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Many of our self-employed clients, including company directors, are now running their business from home.   Because you are at home all day, you will most likely notice an increase in your utility and other bills. 

Certain expenses will be allowed as a business cost and these are outlined below.  Generally, if home costs/bills are fixed there will not be an increase in your bill and hence no extra business cost element.

If there are other family/household members also at home during regular working hours the fact you work from home may only have a marginal effect on increasing the household electricity, heating and other bills above what they would otherwise be.  In the event that this is a case, then we suggest that you do not claim any element of the bills as a business cost.

So what expenses will be allowed as a business cost?

Mobile phone & Broadband Costs

Tax relief can be claimed on mobile phone and internet costs that are necessary for your business. Strictly speaking you should obtain an itemised phone bill and the business calls should be highlighted so that you can accurately calculate the cost of those business calls that qualify as a business expense.  If you are claiming an estimated percentage of the cost of phone bills, we recommend that you review those costs regularly to make sure that you are not over-estimating them.  In the event of a query from Revenue you will need to provide itemised bills showing how you arrived at the business element.   

The cost of broadband is a fixed monthly charge, so it is arguable that there is no business cost at all if you already had broadband in your home for private purposes.  The fact that you are now working at home, will not increase the monthly charge.     If, however, you regularly work from home, and you had to get broadband for business purposes, or you need a high-speed broadband then those costs would generally qualify as a business cost.

Light and heat

To the extent that your light and heat bills have increased because you are working from home, then the amount of the increase may be allowed as a business cost (but please see note above re other family members being at home also during working hours),

Office Furniture

If you need to fit out an office, the cost of office furniture would be an allowable expense and would qualify for capital allowances (so the cost would be spread over a number of years).  Office furniture would include desk, chair, storage and filing cabinets.

Electronic Equipment

Tax relief may be claimed on electronic equipment exclusively required to run your business. Examples include computer hardware and software, mobile phones etc.

You will need a valid VAT invoice, issued to the company, in order to recover VAT on a business expense.

OSK are available to support you throughout the current crisis - please email Imelda Prendergast or call 014394200. 

Take care and stay safe from all the team at OSK.

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