How Do I Calculate my Working From Home Expenses in 5 Steps

1 – Count up all the rooms in your home  

What counts as a room?  

HMRC says that you can count “normal living spaces” as rooms, so you should exclude any hallways or bathrooms from your calculation.  

Tip from Sean  

Alternatively, you could base your calculation on floor space. Calculate the floor space of each room used for business purposes as a percentage of overall floor space and use that ratio to apply to your bills in step 3.  

2 – Identify the rooms that you work in, and how long for  

How do I calculate the percentage of use?  

Calculate the percentage considering the total number of hours that you spend in a room. For example, if you use your living room for 10 hours in a day and spend an hour a day dedicated to doing work in the living room, your business usage of the living room would be 10%. 

Tip from Sean  

If you have a dedicated office, it’s a good idea to also use that room for something else – for example, an office that doubles as a workshop. That’s because if you dedicate an entire room to business use, you will need to pay Capital Gains Tax on that room if you sell your home! 

3 – For each bill, evenly divide the cost by the number of rooms*  

Costs you can apply this calculation to 

-Gas  

-Electricity 

Other costs:  

HMRC says that unless you formalise a rental agreement of your home business space to your company you can’t claim tax relief for fixed costs, since you would pay them whether or not you worked at home. That means that you can’t claim tax relief for fixed costs like: 

• Mortgage payment
• Home insurance
• Repairs and cleaning bills
• Rent
• Council Tax

For example, if the bills identified total £460, and there are 5 rooms in the house, you’d split the cost by the number of rooms (£460/5) giving you £92 per room.

* This method does not apply to broadband and telephone line rental costs. Instead, simply calculate the percentage of costs based on the volume of business use of the line. Please note, you should only claim costs of actual calls or use, and shouldn’t claim any part of the line rental costs (unless you didn’t already have a home phone or broadband line and needed to have one installed in order to be able to work from home). 

4 – Apply the percentage of work use to the relevant room costs  

Living room 

Room cost x work use  

£92 x 10% = £9.20 

Office/workshop 

Room cost x work use  

£92 x 80% = £73.60 

5 – Enter the total business usage amount into your accounts  

Total business usage  

£9.20 + £73.60 = £82.80