Home as office allowance – Any experience/advice?

I always thought it was based on the proportion of the home used (square feet) and if used exclusively , or not. There may be a flat rate option as you have described too.
However, I have read that if exclusively business use, and it is your own home (Owned, not rented) you will be liable for CGT on that portion of the property.
Probably a discussion with a tax advisor.

I've always used a % of my home floor space for office expense plus % of workshop and never had a query. I am classed as a sole trader. That's a % of heating costs etc. as well.

Reply to the comment left by Dennis Leverett at 26/01/2024 - 11:58
I agree, Dennis, if my accountant disagreed, it'd be time to get a new one

The £6 per week is the limit should you wish not to provide evidence of the home office expenditure.

If you have the evidence, speak with a better accountant.

Appears different rules between Ltd Co and individuals managing properties. For individuals the fixed rate varies depending on the number of hours which may be justified using the office to manage the "business". Where less than 25 hrs/month then flat rate is £10, increasing to £26/mth where able to justify greater than 100 hours (i.e. £6/wk). Alternatively allowed to proportion actual costs of which there is some variance on what may be included and if use area or habitable room count, again another factor for split between personal and business use. Fundamentally work up a basis, ensure have evidence of actual costs and so long as reasonable claim the higher amount between fixed and actual.

Hello Andy
There are lots of ways to work out a use of home charge. All you have to do is be reasonable in the way you calculate it.
The charge is supposed to reflect the additional cost of you working from home compared to you working elsewhere.
The £6 per week is aimed at employees who work from home as a requirement of their employment. This can be due to there being no office to work at or living too far from the office.
The £6 per week is a level at which HMRC accepts is a reasonable rate. Interestingly an employee only needs to be required by their employer to work from home for 1 day to claim the full £312 allowance.
If an employee wishes to claim more then they need to provide evidence of the higher costs.
See HMRC web site https://www.gov.uk/tax-relief-for-employees/working-at-home
For the self employed things are different.
A self employed person will use their home for administration, paperwork and possible storage or even manufacturing (from a garage or workshop). The £6 per week will very rarely cover the costs.
For my clients I produce a small spreadsheet which lists out all of the annual costs for using their home (Mortgage interest/rent, electricity, gas, water rate, home insurance, council tax, repairs etc). These are then totaled and the total cost is divided by the number of rooms in the home (exclude bathrooms, toilets and kitchens). I assume that there is one room used for business but this is not set in stone. Square footage can be used instead but it is normally difficult to work out.
This gives a cost per room/square foot per annum.
It is not possible to use this area 100% of the time (you have to sleep, which is not work!) so a reasonable percentage needs to be used. Depending on the type of business this could be as much as 33% (8 hours a day) but is more likely to be 20 -25%.
Applying this percentage will give you a cost for your use of home as office.
I use this figure as a basis for a per week charge for use of home.
Please remember that if a room or area is used exclusively for business purposes you could end up with business rates on that area.
Additionally there could be a capital gains tax problem if an area is used exclusively for business as it would then not qualify for principal private residence relief. You should always ensure that there is some domestic use for the area/room. Watch TV there regularly or let the kids play games on your PC.
Hope this helps.

I have been in the prs 25years, unless you are saving alot against tax is it worth the hassle

Reply to the comment left by Simon Lever - Chartered Accountant helping clients get the best returns from their properties at 26/01/2024 - 17:09
Thanks Simon this is incredibly helpful

Reply to the comment left by Michael Booth at 26/01/2024 - 20:24
Hello Michael yes, there is a massive difference between the £6 per week and a percentage of actual costs so there is most certainly a substantial tax saving. Otherwise no, I wouldn’t be asking the question!

I think the £6 per week, although it may not sound like a lot is probably about right. 10% sounds like a lot. Factor in 168 hours in a week, how many actually spent 'working from home'... then calculate the room? or desk area who have in that home. And you'll find its not that much... Also, be aware that claiming too much of your 'home as office' will subject you to a tax if you own the place and come to sell it. Sometimes, its not worth it. Go with the lower amount and don't stand out to HMRC.