Working from home - Apportioning utility costs

June 13 2017, 0 Comments

Claiming utility costs can differ if you are a sole trader or a limited company. This article is a guide for sole traders.

As a sole trader you can claim some home office expenses if you work from home. HMRC state you can claim a proportion of your utility costs on a “fair and reasonable basis”.

Although we cannot give you definitive tax advice on claiming, here’s a guide on how to appropriate your utility bills.

Here are some of the bills you can take into consideration. This is not an exhaustive list. Please check with your accountant and HMRC what is applicable:

Mortgage Interest / Rent

Electricity / Gas / Water


Council Tax

There are 2 options when claiming a proportion of your costs; The flat rate method or the analysis of costs method.

The Flat Rate method

This is a simple method of working out how many hours you spend exclusively working at home and applying the fixed amount in your accounts. Please note that this method only applies to heating, lighting and power.

25-50 hours per month £10 per month
51-100 hours per month £18 per month
101 or above per month £26 per month


Analysis of Costs method

Whilst the previous method mentioned is very quick and simple to apply, the analysis of costs method can be more worthwhile depending on the nature of the business run from home and / or the hours worked from the property.

Step 1:

How many hours per day is your home used for business use? Full Time Example: 7, Part Time Example: 4

Step 2:

    • A) How many rooms are there in your house? Example 10
    • B) How many rooms in the house are used solely for business use? Example 1
    • C) How many rooms have a split use for personal and business? Example 1

    Step 3:

    Total up your fixed and variable costs per month


    Electricity Example £40

    Gas Example £60

    Maintenance & repairs Example £10

    Cleaning Example £10


    Council Tax Example £150

    Mortgage Interest or rent Example £550

    Water Example £30

    Broadband Example £15

    Insurance Example £20


    Example Total £885


    Working Full Time

    If you work from home more than 7 hours per day the calculation is as follows:

    (Totals of Step 3 / Step 2A) x ((0.5 x Step 2C) + Step 2B)

    Worked Example: (885 / 10) x ((0.5 x 1) + 1)


    Working Part Time

    You will need to scale down your claim as per below:

    (Totals of Step 3 / Step 2A) x ((0.5 x Step 2C) + Step 2B) x (Step 1 / 24)

    Worked Example: ((885 / 10) x ((0.5 x 1) + 1)) x (4 / 24)


    In Business Accountz, once you have your monthly figure, it’s simply a transfer from your “Drawings” account to your “Home as office” expense account to enter the claim.

    Take a free trial of our business accounting software for 14 days and start entering all your data. Call us for help and advice during your trial on 01354 691650 or e-mail