In September 2009, former finance director Mark Telford set up on his own as a sole practitioner working from home in Kent.
As part of his preparations, he created a website and joined networks like LinkedIn. All sensible ways to build a client base. But when he posted about a straightforward “use of home as office” calculation spreadsheet in the LinkedIn Business Group, he set off a minor feeding frenzy.
More than 230 contacts requested the spreadsheet.
“I’m sick and tired of seeing discussions [on LinkedIn] which are trying a hard sell,” Telford said. “By offering information for free, I managed to engage with potential clients and have what you could call a ‘warm referral’ for future work.
Telford had concocted the calculator to deal with his own situation, but quickly realised there would be others in the same boat. “I had completely underestimated the amount I could reasonably claim as business expenses. For a long time, it was widely accepted that individuals could charge a nominal £2 per week [rising to £3 a week from August 2009) as a notional tax deductible expense in respect of using a room within their home for business,” he said.
But HMRC’s scale rate is designed for individuals who might write up their books and raise invoices once a week. “What about those people who work from home two, three or more days a week?” Telford asked.
“Rather than raise the issue referring to tax legislation and accounting jargon I decided to use a straight forward practical approach in a format most people could follow.”
Telford’s spreadsheet is a relatively quick way to get an idea of the amounts you could reclaim. “Bear in mind there is so much more to costs that can be claimed for as a sole trader, business or employee working from home,” he said.
Is the calculator something he could sell?
“Probably not. It’s too basic and it’s not definitive. To get the maximum benefit users really need to speak to an accountant, hopefully me, who can try to maximise on their tax savings and not just go through the motions of preparing a set of accounts for a tax return.”
If you would like a copy of Mark's home use tax calculator, email your request to him via Info [at] telfordassociates.com.