Something we are often asked is; “What expenses can I claim for running my business from home?”
Briefly, we can claim household running costs as follows:
Firstly, we need to calculate the business element of the calls. The Revenue will now only accept a figure that has been calculated from at least two telephone bills from each line / mobile used over the year. In practice, this means going through the itemised bills to identify business / personal usage.
You don’t need to identify every call, but will need to calculate the business percentage of those you can.
Whilst this may seem a lot of effort, bear in mind that, without adequate evidence, the Revenue will not allow ANY costs against the business. Also, you only need to do this for a couple of bills, just to establish a pattern.
Use of Home As Office
This is a global allowance, designed to cover us for the element of the home used for business purposes.
The simplest way to carry out the calculation is to add up the annual costs (as applicable) of:
· Gas / electric / solid fuel
· Council Tax
· Contents / buildings insurance
· Water rates
Remember to keep all the bills to support these amounts.
Next, we simply count up the number of principal rooms in the house (kitchen, reception rooms, bedrooms, bathroom etc). If there are seven, and one is used for half for business, and half personal (eg spare bedroom / office) then we would allow half of one seventh.
We should remember that this ‘allowance’ is a Revenue concession, and is not supported as business expenditure in Tax Law.
Sticking to the Revenue guidance will avoid any suggestion of liability to Capital Gains Tax on the part or parts of your home you use for business.
You may have exceptional circumstances depending on your business, in which case, the calculation can be adapted. The more information you can provide, the easier it is for your accountant, and the greater the protection in the event of Revenue Enquiries.