working from home for limited companies

Working From Home Expenses: Limited Company

Victoria Scally Expenses, Limited Company, Startup

If you’re a limited company and are rolling out increased flexible working, or simply want to be aware of what you can claim as working from home expenses for your limited company, here’s a quick guide for you:

There are several options when it comes to this. Working from home expenses for a limited company can vary, depending on what your business involves, of course, but broadly the below can apply:

Option 1:

Flat Rate, or Fixed Rate Claim

To keep things simple, working from home expenses for a limited company might be easier to calculate on a flat rate.

This is currently £4 per week. (going up to £6 in April 2020).

You claim this from your company, so it’s often credited to your Director’s Loan Account for you to draw tax free at a later date.

Now, this may seem like a tiny amount, but if you claim every month, it can add up to £208 per year, and in our book, any opportunity to save you tax is great.

Unless you have a specific need to look into the detail of exactly what you claim, this is a good start.

Option 2:

Claim Actual Expenses

You can claim actual expenses from your company such as:

  • Metered utilities
  • Actual cost of calls made on your home telephone
  • Home broadband costs, if the contract is in the company name
  • Insurance, if there is business equipment insured under that policy
  • Repairs to business equipment

The key here to remember is that you can only claim for incremental costs incurred while working from home. This is the main difference between the working from home expenses for a limited company, compared with sole traders.

You cannot claim for any costs you would have incurred anyway, as part of running your home, like Council Tax, Rent and the Mortgage Interest. The same applies for costs deemed to have a dual purpose – ie are business AND personal, but can’t be separated.

The trick to separating some of those bills where you pay a monthly fee for the whole amount (such as your gas and electricity) is to work this out according to the number of rooms you have in your property, and the amount of time you spend working in them.

Option 3:

The ‘rent’ option

As we mentioned in option 2, you cannot claim ‘overhead’ costs such as mortgage/rent etc as a working from home expense for a limited company, or as a director.

However (and we’re all about options), there is an option to formally rent part of your property to your company.

If you do this, it is usually possible to claim these costs, but depending on your circumstances this isn’t always tax efficient.

This option is a bit more involved so we wont cover the detail in this blog, but we’ll come back to it at a later date.