Claiming for a proportion of household expenses This fixed amount applies from April 2020 onwards. Most contractor accountants we work with suggest that contractors go for this simple option unless there’s a compelling reason to look at claiming proportional expenses, which we discuss next. A sum which ordinarily would be subject to Corporation Tax, and then personal taxes if extracted any other way. On the surface, this may seem like a paltry sum, but if you claim every month, this adds up to £312 per year. HMRC states: “We would expect that £6 per week would be sufficient for most cases, particularly where the additional costs are only for heating and lighting the work area.” You can read the precise details in EIM01476. This pre-agreed sum does not have to be authorised in any way. Your employer (your own company) can currently pay you (the employee) £26 per month or £6 per week to cover ‘use of home’ costs. If you only work at home occasionally, then HMRC allows your company to pay you nominal expenses to cover the general costs you may incur. Use of home expense which does not require justification Here, we explore the benefits and limitations of each option. The third involves creating a formal agreement between you and your company.

The first one is a fixed (small) HMRC allowable expense, the second involves working out a proportion of household expenses and charging it to your business. Which (if any) household expenses can you legitimately claim against your company’s tax bill?īroadly speaking, there are three ways to account for home working expenses you may incur whilst running your business. Pension contributions and tax relief – how it worksĪs a limited company owner, you may well carry out your trade from home – occasionally, or on a regular basis.

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Limited company contractor expenses