Accounting for Bloggers: Working from home

Last week Georgi Rollings of Starfish Accounting offered tips on expenses and continuing the BritMums Accounting fro Bloggers series this week Georgi offers more tax advice on working from home…

If you write your blog at home, which most of us do, you can also calculate a tax deduction for working from home.

The easiest way to do this is to claim a small weekly allowance for each week where you do some work from home, for example £3 per week.  This would not be queried by HM Revenue & Customs (HMRC) and avoids you having to do any detailed calculations.

Alternatively, you can look at how much of your house you use, and how much of the time you use it for, and calculate a proportion of your costs.

What fixed costs can I include?

• Council tax;
• Mortgage interest or rent (but NOT repayments of capital);
• Insurance (unless you have a separate business use policy which is deductible in full, and then you cannot include part of your general household policy);
• Water rates;
• General repairs (e.g. general redecoration of the exterior, or repairs to the roof).  You can’t include costs of redecorating a room which is not used for business.

What running (variable) costs can I include?

• Cleaning (unless the cleaner does not clean your office);
• Heat, light and power;
• Telephone and broadband (see previous post).

How do I determine what proportion to take?

1. How much of the house do you use for business?  For example you could look at how many rooms there are, or what percentage of the floor area you use;
2. How much of the time is the room used for business vs. domestic use?

As an example, you use your living room, which is approximately 10% of your floor space, and spend 2 hours each day writing your blog and reading other blogs.  Your family use the room for 2 hours in the evening.  Your annual fixed costs are £7,500, and your annual variable costs (excluding telephone and broadband) are £1,500.  A reasonable tax deduction would be £450 = total costs of £9,000 x 10% (floor space) x ½ (business vs. personal usage).

HMRC provide several other examples.

About Starfish Accounting

Starfish Accounting provides accounting, tax and bookkeeping services to small businesses and works primarily with women in business.  Georgi Rollings, the founder of Starfish Accounting, is a qualified Chartered Accountant with more than 15 years experience.  Georgi is also proud mum to beautiful twin girls, and juggles business and babies out of her home office in Maidenhead, Berkshire.

Tel:  01628 299 310

Email:  info@starfishaccounting.co.uk

Web:  http://www.starfishaccounting.co.uk

Blog:  http://blog.starfishaccounting.co.uk

Facebook:  http://www.facebook.com/StarfishAccounting

Twitter:  https://twitter.com/#!/StarfishAcc

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