For employees, working at home is a privilege that comes with years of trying to convince your boss that you're not going to be sat around all day carouselling through Netflix. But for us Freelancers – working from home is just another day in the office. SURE, we can scive off whenever we want, but as we all very-well know, If we don't work – we don't get paid.
Thanks to the continent-hopping mastery of that white-headed capuchin monkey from the hit 90's movie; OUTBREAK - working from home is no longer a choice – for most, it's compulsory.... for the foreseeable anyways.
There are two methods you can claim for WFH. The Simplified Method and an Actual Cost method.
This method is used by the majority of accountants and other accounting software due it's simple 'one-claim-for-all' method. The only winners here are the accountants because it makes their life - a hell of a lot easier.
The real loser is you. Why? The biggest issues with using the simplified method is that the fixed amount is quite simply pitiful. A mere hors d'oeuvres. A brown bag... you get the idea.. when compare it to what you can (and should) be claiming for - it deeply sucks.
This can literally save you hundreds on your tax bill every year. So why then doesn't everyone just use this method? Well, because it's the opposite of simple... it's tricky. To work out the actual cost we must consider the cost of your rent and utility bills; consider how many rooms you have in your house, how much of a room (or rooms) you use for business and what percent of the time you use them for business related activities.
A nightmare for accountants and a real nut-ache for freelancers.
Before we show you how it works, let's first check if you're eligible.
(*all humans the world over raise their hands). Great, you are eligible. You can now claim a portion of home costs as a business expense.
Note: It doesn’t matter which order you do these steps. You can start recording straight away. But the sooner you give us your home working details – the more accurate your TAXO’D (tax owed) figure. Kapish?
First, let’s dial in the information on your home working arrangements. You can do this via your tax profile.
Or, you can start filling out your tax profile, if you have't already and you will soon arrive at the WFH question set.
Pro tip: Completing your tax profile will help you get the most accurate live tax total throughout the year.
Recording your home office expenses is as simple as recording any other expense.
Pro tip: Just connect your bank via BankSync, tag all Work-From-Home expenses under Home Office and the correct category and let TAXO'D do the rest! See how, here
And that’s it! Pop your expenses in the appropriate category (under HOME OFFICE) and TAXO’D does all the calculation malarkey for you.
Note: When viewing your transaction in your expense draw your record will show the total amount you entered. The calculation is made once the appropriate questions have been answered in your tax profile. The correct amount will show on the home page ledger.
TAXO’D takes into account fixed costs like mortgage or rent charges as well as variable costs like electricity and general maintenance.
How your calculations are displayed: Home office expenses are often regular payments. To save time, it’s a good idea to set these expenses to recur. Choose the frequency of the payment (daily, weekly, monthly) and how long it will repeat for. Click here to see how setting these expenses to 'recur' can save you loads of time.
We provide an end-to-end tax solution for all freelancers and most self-employed tax payers. Record as you go, know what you owe and file direct to HMRC. No Green Form. No More Accountants. All from your phone or desktop.
TAXO'D is a salary tax calculator. You record as you go (on your phone or your computer) day by day, throughout the tax year. As the weeks unfold and you are actively recording your income and expenses. With TAXO'D personal tax app - you will see in real-time displays the tax and National Insurance that you owe.With TAXO'D tax return software know exactly what tax you owe and when you owe it. Simple.
TAXO'D mobile tax tool does away with the need for an accountant, saving you further money and time. If you are earning money independently and responsible for your own taxes then sign up today. And find out why TAXO'D is the best self assessment software for freelancers and contractors.
Tax Sucks! Spend less time and money on it with TAXO'D tax filing app
Disclaimer: This is simply a guide and should not be treated as tax advice. Contact HMRC directly if you need tax advice.
Award-winning freelance Designer, Director & Animator and tax vigalante
