Working From Home – what can you claim for?

If you use part of your home as an office, you may be able to lower your overall cost of doing business. Here we outline some of the things you might need to know if you intend to claim expenses.

 

Claims

Firstly, you need to think about HMRC. Don’t worry, it’s unlikely to make any enquiries so long as the claim is reasonable and consistent with the type of business being operated. Be wary that not all local HMRC officers follow this approach, so it’s important that you’re prepared to back up your claim if they ask.

A dedicated room or workspace which is exclusively for business use is a must. If it has a dual purpose i.e. dining or kitchen table, then it’s not allowable as a tax deduction.

 

Two common ways of working out how much you can claim:

1. The flat rate method

This is the easiest to work out and doesn’t require any records to be kept or evidence of expenditure. HMRC publishes flat rates each year. The current ‘Home As Office’ allowance from April 2018/19 is £18 a month, making an annual claim worth £208. Not much, but better than nothing, and takes up no time or effort to calculate.

2. The apportionment method

Apportionment is when an expense is ‘split’ between business use and private use, on a basis intended to show the portion of time used for each activity. Apportionment is generally calculated according to the floor area of your home used for business purposes.

The apportionment method splits property costs into fixed and running costs; the amount that you can claim will be based on the portion of use that you have calculated as being applied to your business, and/or the actual cost of the business part of the expense.

For example, let’s say one room in a house with four rooms (bathrooms not included) is used as an office with the following monthly expenses:

Electricity – £60 

Gas – £20  

Council Tax – £100 

Insurance – £40 

Total = £220 

One quarter of the total could be claimed each month, i.e. £55.

(Note that phone calls need to be on a business line, or claimed on a personal line using an itemised bill.)

If you use apportionment, you’ll need to keep all your invoices and receipts as evidence of the costs incurred. By adopting a sensible and realistic approach reflecting your business circumstances, you should be able to successfully handle any HMRC enquiry.

 

Remember:

  • Decide whether the weekly flat rate of £4 or the more detailed apportionment method is best for you. If it’s the apportionment method, review this annually and maintain a record of costs.

 

  • If you only use a table top while your family watches TV, you are unable to claim use of home. However, If you set aside part of your home at specific times for business use, then you are able to claim.

 

These tips are for information purposes and are just a place to start. If you want to know more, we recommend you seek advice from a good specialist Contractor Accountant such as Intouch, who will review your specific situation and provide you with the right advice to make sure you’re claiming all the benefits you’re entitled to.

 

If you’d like more information on Working From Home – download your free guide here.

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Flexible working: Pros and cons

There’s no doubt that we’re now living in the era of flexible working. Of course, for contractors and freelancers, this trend of choosing how long, where and when you work is nothing new, but now it’s not just the self-employed who are empowered to manage their schedules.

In the UK, nearly-two thirds (64%) of employees now work flexibly, according to the ‘2017 Flexible Working Survey’ by Ten2Two. However, it seems that employers are still a little reticent to fully embrace the flexible working revolution, with Timewise’s 2017 report revealing that less than one in ten jobs paying over £20,000 are advertised as being open to flexible working.

So, why is it that firms are somewhat unsure about whether or not to promote flexible working to staff? Like anything, flexible working has its pros and cons. We’ll start with the cons:

 

1. Could hinder productivity

Organisations are concerned that giving everybody a degree of freedom in deciding how work is completed will result in reduced productivity for both individuals and teams. Even if employees are just 5% less productive working remotely, it’s going to start adding up once you think about it collectively. Meanwhile, for those who are self-employed, a day of distractions at home could mean that you have to play catch up at the weekend.

 

2. Feelings of isolation

Flexible working sounds good in practice for individuals, but the reality can be very different. For some people, too many consecutive days working solo can lead to feelings of isolation, particularly if communication with the ‘outside world’ is lacking. A good support network is essential so that individuals don’t feel like they have nowhere to turn should they need to. Meanwhile, from an employer’s perspective, a lack of collaboration between colleagues could limit the cohesiveness of teams and the sharing of ideas.

 

3. Work intensification

Flexible working often blurs the line between work and home, to the point where individuals struggle to switch off at the end of the day – an issue all contractors and freelancers who work remotely wrangle with. For the sake of work/life balance and productivity, individuals need to feel like they can pack work away for the day and not like they owe it to their company to go beyond the call of duty every day.

 

However, few would doubt that the pros of flexible working far outweigh the cons. In Ten2Two’s survey, 83% of employers agreed that flexible working had benefited their business. Here are the main arguments for adopting the trend:

 

1. Work anywhere remotely

Perhaps the benefit you most associate with flexible working is the ability to work remotely, away from the traditional office environment; be it at home, in a cafe, library, shared space, or even in a foreign country. Find the environment that brings out the best in you – if that’s at home, make sure you ‘craft’ in a way that means you can get stuff done.

 

2. Less stress + fewer sick days = increased productivity

Workplace politics can be a real problem if they are rooted in manipulation or gossip. Flexible working can help to minimise office politics, so the potential for conflict and any resulting occupational stress decreases. As stress decreases, so will the number of sick days employees take in the working year. This has obvious benefits to employers in terms of greater productivity, but it’s also valuable for freelancers and contractors who might have to forfeit a day or two’s work if they’re too sick to get out of bed.

 

3. Greater convenience for life priorities

Everybody has different priorities in life. For some people, their children will be the priority; for others, it might be sports and keeping fit. Flexible working gives us a better chance of being successful at what matters most to us. For example, having a flexible schedule means you can take an hour out to pick up the kids from school and do the food shopping.

Ultimately, flexible working works for some people, but others may need a bit more structure.

If you’re considering a flexible approach to work and think contracting is for you, Intouch Accounting are here for support by answering any questions you may have, from assessing whether it’s the right time, to helping set up a Limited Company.

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

If you contract from home, you’ll want to read this…

6 ways to beat loneliness when working alone

Contracting from home can be great; you get to design your perfect working space, what radio station you listen to and enjoy endless cups of tea whilst wearing your slippers (should you wish to). But whilst it can sound like the perfect working environment for many, loneliness can creep in – especially if you have minimal client contact and few other contracting colleagues to talk to.

 

Even introverts can feel lonely, so if you enjoy working alone and think this blog isn’t for you – read on anyway. You might just discover a new tip that will improve your productivity when contracting from home.

 

1.What fuels your professional fire?

It could be an early morning 5K before breakfast, a lunchtime catch up with an old friend, or even jumping on the contracting forums to share your thoughts on what’s currently affecting the contracting community.

 

Whatever it may be, ensure you have a few options that you can call on when you feel your fire burning low. Your professional productivity will thank you!

 

2. Speak to your suppliers

Your Personal Accountant isn’t just there to answer your accountancy and tax questions, they can also give you advice on all the areas that surround self employment. The same can be said for your business insurance provider or financial adviser for example, should you enlist their services.

 

They speak to individuals just like you every day about a whole host of topics, so why not give them a call? Or better yet, schedule a monthly call with them to discuss your career and how they can help you achieve your goals for the month. They may have just launched a new product or service that could make your contracting life easier.

 

3. Ban your home office as your meeting location

It’s all too easy to update your client from the comfort of your home office, or liaise with prospective clients from behind your computer screen. But doing it too often can lead to feelings of isolation, which isn’t good for you or your client.

 

Remember the good old days when people actually enjoyed meeting face-to-face? Why not bring it back! The next time you have a planned meeting, go to your client or prospective client’s office and actually meet with them. Not only will they get to see who you are as an individual and get a taste for your personality, you’ll also have more of a sense of purpose by actually getting ready and leaving your home office.

 

And remember, as a Limited Company contractor you can claim your travel and subsistence expenses, so there really is no excuse not to!

 

4. The legend of the invisible contractor

As a group of professionals, the UK’s micro business community (those with 1-9 employees) currently stands at an impressive 5.25 million*, so as a Limited Company contractor you are certainly not alone.

 

Whilst you may feel as though your contribution to the UK’s economy as a one-person band is minimal, collectively you’re a force to be reckoned with! So why not reach out to your contracting colleagues to find out their thoughts on being a contractor, what trends they’re seeing for desirable skills or even if they have any contacts that could be of use to you? With such a large community, there’s no reason to feel alone.

 

5. Be strict with your time

As a contractor your time is just that, yours – so ensure your work does not encroach on your personal life. After a hard day of working it’s too easy to swap plans with friends or family for a quiet night in. Once in a while it is a great way to recharge your batteries, but do it too often and you’ll cut yourself off.

 

Set yourself a daily schedule, stick to it and don’t let work be the reason why your personal life is put on hold.

 

6. Get moving

A little exercise now and then is the perfect way to blast away any loneliness. Was there a sport you loved to do as a child that you’d like to try as an adult, or local sports team whose social events sound as much fun as the actual sport itself?

 

Healthy body = healthy mind, so get out there and start having some fun!

 

Final thoughts

It can be tempting and easy to fall into the trap of becoming a lone wolf, so ensure you have a personal plan that works for you to help banish those entrepreneur blues.

 

And remember, your career is something you love so tailor it to suit you. Don’t let loneliness stop you from reaching contracting greatness!

 

*The Department for Business, Energy & Industrial Strategy

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.