HOW TO CALCULATE FLAT RATE HOMEWORKING EXPENSES
December 22 2015.


HM Revenue & Customs (HMRC) has produced a simplified way for sole traders and partnerships to calculate business expenses online.


Many small businesses can choose to be taxed on the basis of the cash that passes through their books. But where cash basis is used, it is also possible for the business to use certain simplified arrangements for claiming expenditure in working out taxable profits for income tax purposes. Flat rate expenses can be claimed for business costs for vehicles, working from home, and living at the business premises.

Where a trader runs his business from his home, he will be able to claim flat rate expenses for business use of the property. Using flat rates means it is not necessary to work out the proportion of personal and business use, for example, how much of utility bills are for business. Instead a monthly deduction will be allowable provided certain criteria are satisfied.

Traders need to keep records of business miles for vehicles, the number of hours worked at home, and details of people living at the business premises over the year. A claim to tax relief can then be made on the relevant self-assessment return.

The business expenses checker can be found online HERE.