Diploma in Professional Accounting
Diploma for Financial Advisers
Member of London Institute of Banking and Finance

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What if I use something for both business and personal reasons?

This is a common situation, especially for self-employed individuals. The key rule is that you can only claim the business portion of the cost. You need to work out a fair way to divide the cost between business and personal use [1].

Example: Imagine your mobile phone bill for the year is £200. If you estimate that £70 of this was for business calls and £130 was for personal calls, you can only claim £70 as an allowable expense [1].

Working from Home Expenses

If you work from home, you can claim a proportion of your household costs. This might include:

•Heating and electricity: For the rooms you use for business.

•Council Tax: A portion related to your business use of the property.

•Mortgage interest or rent: A share of these costs.

•Internet and telephone use: The business portion of these bills.

To work out the business portion, you need a ‘reasonable method’. This could be based on the number of rooms you use for business compared to the total rooms in your home, or the amount of time you spend working from home [1].

Example: If you have 4 rooms in your home, and one is used solely as an office, you might claim 1/4 of your electricity bill as an allowable expense. If you only work from home one day a week, you’d then divide that amount by 7 to get your daily claim [1].

References

[1] GOV.UK. Expenses if you’re self-employed: Overview. Available at:
https://www.gov.uk/expenses-if-youre-self-employed

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