Five tips on how to bill back your home as part of your business

Working from home might be a dream for some people, but can offer plenty of pitfalls to consider. Here is how you can bill back your time spent working at home.

For those of us that work in an office, you might often find yourself day-dreaming, wishing you were back at home working away in bed with a freshly made cup of tea and day-time tv quietly playing in the background.

Most modern jobs can quite easily be done remotely from any computer or mobile device, with the Internet of Things only encouraging this trend. It can be argued that working from home can actually be beneficial to employees as it shows you are willing to be flexible and trusting of their time which can boost productivity.

Presenteeism is becoming less of a social norm within modern businesses and you will often find freelancers and other industry workers in the local coffee shop working away rather than at their office desk.

Justin and Sadie Knight from Glassraven made the decision to move down to Cornwall and grow their business from their own home, battling against several obstacles but ultimately finding the decision beneficial.

Trusting your staff with this coveted perk can be tricky and it can be even harder to justify working from home yourself if you are looking to actively grow your business. Here are five ways you can bill back time spent working at home.

Isn’t there an allowance of £4 per week?

If your business is a limited company, and you’re claiming tax relief for working from home, then HMRC won’t ask to see the calculations if your business use of home comes to no more than £4 a week – but it’s not an allowance, you can’t automatically claim that much back if you work at home. To claim anything for business use of home when your business is a company, you have to be doing work at home that earns the company some money.

Sadie adds: “Our business hasn’t suffered from moving. In fact we’ve grown our client base since we came down here, mostly from local small businesses. And we still have a lot of clients elsewhere in the UK.”

Don’t have a room just for business, all the time

While you’re working, your room must only be used for business, but do have times when you’re not working and the room is used for something else, for example as a guest bedroom. Otherwise, when you sell your home, the room could be liable for capital gains tax as a business asset.

Justin adds, “We use Skype and GoToMeeting, which mean we can connect with people all over the world so catching up with clients is easy. I’ve taken a Skype call on the beach just after surfing before, so you don’t have to be tied to a particular location to work effectively with clients.”

Limited company? Business broadband in the company’s name, not yours

Company broadband with the contract in your name can result in a hefty taxable benefit. Instead, have a separate broadband and phone line in the company’s name.

Justin says, “We were renting for the first few years and we had difficulty in getting broadband installed into our rented property – to the point where there were times we had to run everything through a 3G connection! Thankfully that didn’t last long and we were soon able to get up and running with better internet access.”

Sole trader? Flat rate replaces only light and heat

You may have heard about the flat rate allowance for business use of home. That’s only available for sole traders and the only costs it covers are light and heat. You still need to work out how much you can claim for other costs such as a share of the rent or mortgage interest.

Water’s a wash-out

One cost of working at home that you can’t claim tax relief on is extra use of water for all those cups of coffee (and consequent trips to the loo). The only time you can claim water when you work at home, is if you use a lot of water and have a separate business water supply, for example if you’re running a dog grooming parlour.

Sadie concludes, “It’s a scary prospect, but the benefits are enormous. Because of new technology and the changing attitudes that people have about working with digital businesses, you can essentially work from anywhere you want – so it’s never been easier to move away from the cities and have a better work-life balance in a more remote, beautiful location.”

For National Work From Home Day, Bupa research reveals that home-workers are ten per cent more likely to sustain work-related injuries – usually related to not having the right set up. Bupa has created a checklist, to help people get the most out of working from home.

Six tips for working from home

  • Work in a room with adequate light so you don’t have to strain your eyes
  • Sit in a chair where your feet can reach the floor, or are supported by a footrest
  • Ensure your monitor is at least an arm’s length away from you and the top of the monitor is at eye level
  • Try to use a hands-free phone line and avoid typing/writing with a phone between your ear and shoulder, as this can lead to neck problems
  • Try to break more regularly than you would in an office as your posture is likely to be worse at home, ideally every 20 – 30 minutes
  • Make time to stretch out to avoid stiffness, particularly if you spend a long period of time in the same position

Owen Gough

Owen Gough

Owen Gough is a reporter for SmallBusiness.co.uk. He has a background in small business marketing strategies and is responsible for writing content on subjects ranging from small business finance to technology...

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