Rent

If you're using your home as your small business premises, you can use HMRC's flat rate which varies, depending on how many hours you spend working from home:

• 25-50 hours: £10 per month
• 51-100 hours: £18 per month
• 101 hours or more: £26 per month

HMRCs flat rate covers any rent and utilities. It does not cover phone or internet costs - you can expense the share of those that relates to your business.

Specific considerations

It's also possible to determine a more specific share of any home costs that can be attributed to the business, however this can be complex.

For example, if you have a flat with 5 rooms and 1 of those rooms is used for work 8 hours a day, 5 days a week; you could estimate the share of bills as such:

• 1/5 of the area of the flat = 0.2
• 8/24 hours a day = 0.33
• 5/7 days a week =0.71

Effective share: 0.20.330.71= 0.047.

0.047*100 gives us 4.7%.

As you can see, this is quite a small share. For most, it's much easier to go with the flat rate.

If you are struggling to determine costs to expense via the cost method, or would struggle to explain your rationale, it will be lower risk to use the flat rate instead.

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