Remember this?

Well, check this out:
new-ceiling

My office has turned into a spare bedroom, which has tax relief implications. It is quite difficult to find accurate information regarding tax relief; every time I called the Inland Revenue, I received different advice. I had to hire an accountant one year to get answers to my questions, although everyone does seem to have their own interpretation of what you can and can’t claim. This is my understanding of it:

When you’re self-employed, you can claim tax relief on a portion of your bills and mortgage/rent, as long as your office is really an office and not a bedroom with a desk in a corner, in other words, the room has to be "wholly and exclusively" used for business purposes. This portion is calculated by counting the number of rooms in your home, excluding your kitchen, bathroom and hallway, and establishing the fraction of your home used for your business, which you can use to claim tax relief on:

  • Rent or mortgage
  • Gas and electricity
  • Council tax
  • Home and contents insurance
  • Water rates

You can also claim part of your phone bill (a bit of a pain, as you have to go through your itemised bill to calculate the exact amount of business calls), travel, professional costs (in my case, my membership to the Institute of Linguists), IT software and hardware, stationery, promotion and advertising (this Website, business cards, etc.), professional development (courses and books) and repairs to the room used as an office.

Things are going to be a lot more clear-cut from now on, as most of my business expenses will be linked to the office (rent and business phone line). The one expense that I assumed I could claim was working clothes, but I was advised that it is not allowed, maybe because it’s difficult to make the distinction between "work" clothes and "civilian" clothes. I also might try and convince the tax people that I really, really needed to buy this little beauty for my "business trips" between home and office, but that might be pushing it.