Tax Insider Tip: Home Office: Fixed Rate Deduction

To save the work involved in calculating the proportion of household expenses that are deductible in respect of a home office, it may be possible to agree a fixed deduction with HMRC in line with the tax-free allowances for employees who work from home (£4 per week for 2012/13).

It is understood that HMRC do not challenge reasonable claims where there is minor use of home for work.

Example:
Nicola is self-employed as a mobile hairdresser. She carries out the associated administration at home.

To make life easier she claims a deduction for the home office costs in accordance with HMRC’s allowance for employees who work from home of £4 per week. She therefore deducts £208 in computing her business profits in respect of the business use of her home.

 

This is a sample tip taken from our 136 page guide:
101 Ultimate Tax Strategies Revealed.

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