Many small businesses are based at home and if you work from home it is possible to claim a reasonable amount as a tax deduction for using a room or rooms at home for business.
The costs of heating, lighting, water and mortgage interest are costs that could be considered. But, due to the capital gains issue detailed later, whilst these costs should be ascertained the claim should be a round sum amount baring a resemblance to the actual amounts rather than an exact reclaim.
If the home is used for only a few hours a week, say a joiner doing his bookkeeping and paperwork in an evening then a reasonable claim acceptable to HMRC and set out in their online manuals would be £4 per week over say 50 weeks making a claim of £200. If the claim is going to be higher than this then all original receipts and evidence must be kept and a more precise calculation will need to be made.
HMRC have set out their view on what can be claimed in their on line manuals and basically there are no hard and fast rules. What is regarded as reasonable is influenced by so many factors too many to go into here but if a room is used exclusively for work the division of the total household bills relating to the items mentioned previously may simply be divided by the number of rooms in the house.
Great care should be taken however because this may impact on the Capital Gains Tax private residence exemption when the property is sold. If any part of the house is used exclusively for business then that part of the house will simply not qualify for the exemption. Better to ensure there is some domestic activity taking place in the room ensuring it is not exclusively used for business.
