Getting a VAT Deduction on your Home Office Costs

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VAT deduction on Home Office

Getting a tax deduction for your home office costs


Who is eligible?

Not everyone who works from home will be eligible to claim back the VAT on their home office costs, so here's a checklist for you to determine whether you need to read further. You must:-

  • Have a valid VAT registration in place;
  • Be working from home;
  • Be incurring VAT on some of those home costs, and
  • Be operating as a sole trader or partnership

If you satisfy all those conditions then you can claim back some of the VAT on your home costs.

Which costs on your home office can be claimed back?

The costs I have in mind will typically be your:-

  • energy bills;
  • security costs;
  • cleaning, and
  • repairs.

However, any costs you incur running your home would count, provided they have VAT levied on them.

What proportion of the VAT on these bills can be claimed back?

You can work out the business proportion in any way - all you have to do is show that the amount you are claiming is reasonable. Typically, I would calculate the percentage of the floorspace used as an office compared to the floorspace of the house as a whole. But other methods are acceptable, provided they give a good approximation to how the home is being used for business compared to domestic purposes.

Why is your Company not eligible?

A Company must be responsible for the household bills (i.e. they must be in the Company's name) if it wants to claim VAT on a director’s home expenses. This could have knock-on consequences for your heating and lighting bills if the utility provider decides to charge you as a business rather than domestic customer. There will also be benefits-in-kind complications for the director because of the private use of the supply. For these reasons avoid claiming VAT back on home office costs through a Company.

Tax Tip - If the above is applicable to you but you have not claimed back any such costs the past then you can go back 4 years. All you need are the invoices showing the VAT. If you don't have them consider asking the suppliers for duplicates.

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