Other business costs you may need to consider include:

• Home based business insurance to cover Employers and Public Liability and any business equipment, and
• You may need professional indemnity cover.

HMRC will have no problem if you claim a proportion of household expenses, but the calculations involved can be subjective: how much space is taken up by your business, how long do you spend working at home each day, what are your monthly household costs? As a workaround, HMRC has a fixed rate allowance that you could use instead of plowing through endless calculations. If you work more than 25 hours a month from home you could claim:

• 25 to 50 hours a month – claim £10 per month
• 51 to 100 hours a month – claim £18 per month
• More than 100 a month – claim £26 per month

Depending on your monthly household costs, claiming these fixed rate allowances may be short-changing your option to claim a realistic proportion of your actual costs. The only way to see which is more beneficial is to work out the alternatives.

Planning note:

Clients often ask if claiming for business use of home costs will result in a charge to Capital Gains Tax when they sell the property. There is a risk, but it can be avoided if you ensure that the space you designate as a home office doubles as a hobbies room, or space to store your golf clubs. The key is to demonstrate that the area has a duality of use: business and private.