Have you ever wondered what household expenses you can claim as part of your self-employed tax return? Submitting your self-assessment is undoubtedly a big task; it’s also something that many of us dread each year. After all, tax can be a huge sum of money down the pan in one go.
However, if this has left you feeling worried, there are many expenses you can claim. And, while your professional accountant should be able to help you decide which expenses can be claimed back, there are several common expenses it’s worth knowing about.
What Household Expenses Can I Claim for my Self-Employed Tax Return?
As part of your self-employed tax return, there are several expenses you can claim. Keeping these in mind may help lower your tax bill, keeping more money in your pocket. However, it can be hard to define exactly what these are. After all, every business’s costs are different. What’s more, when working from home, it can be difficult to approximate how much is for business versus personal reasons.
Some self-employed expenses you are allowed to claim on your tax return include:
- Office expenses
- Stock and materials
- Travel
- Legal costs
- Clothing
- Staff costs
- Marketing
- Business insurance costs
- Subscriptions
Using Simplified Expenses for Your Tax Return Through Self-Assessment
If keeping track on your exact expenses seems a little difficult, there’s some good news. You can actually claim back a large amount of expenses through the simplified expenses system. This system is designed for sole traders and partnerships, assuming the partner is an individual versus a company.
Understanding Working from Home Expenses
While it’s usually advisable to record exactly your costs, work from home expenses off another option for the self-employed. These expenses are based on the number of hours you work from home, making them somewhat flexible.
Work from home expenses are a simplified alternative to recording your actual expenses. These come into play from a minimum of 25 hours per month. This means you would need to work (on average) at least 6.25 hours per week to claim these expenses. If you work less than 25 hours per month from home, you unfortunately won’t be able to use this system.
If you work between 25 and 50 hours per month from home, you can claim expenses of £10 per week. This increases to £18 per week for between 51 and 100 hours per month from home. And, finally, you can claim £26 per week if you work over 100 hours per month from home. In other words, if you work full time from home, you’ll likely be in the latter category. Calculating the number of hours you work is very important here, as it influences which bracket you’re in.
If the number of hours you work from home fluctuates, you can also vary the expenses claim throughout the year. For example, support you work full time from home in the winter. However, you only work for 50 hours per month at home in the spring, summer, and autumn. In this case, you could claim the three winter months at a higher expense rate, and the other nine months at a lower rate.
What Does the Work From Home Expenses Not Cover?
Two main expenses you may incur that are not covered under work from home expenses are phone and broadband charges. As a result, it’s likely worth factoring these into your expenses; always seek an accountant’s advice on this first.
Will Simplified Tax Return Self-Assessment Expenses be Enough?
For the sake of taxes, if you qualify to use simplified expenses, this should be fine. However, if you are applying for a bank loan (etc), you may still need to provide detailed expenses.
Of course, not all businesses will necessarily benefit from simplified expenses. In such cases, ensuring you keep accurate records of all business expenses related to working from home is vital.
Always Ask Your Accountant for More Support
At the end of the day, every business’s costs differ. Following this thought, it’s highly recommended to ask your accountant if you need any more support with claiming expenses. Fortunately, you can always pick and mix which simplified expenses you use (if any); this represents a good option to help lower your tax bill to reflect the costs of working from home.