If you’ve decided to work from home as a contractor or freelancer, you’ll be enjoying several great advantages already. You’re never late for work, for one thing. Nonetheless, home working isn’t just beneficial for those who’ve previously battled traffic woes; it also helps you make significant savings.
Here, we guide you through the financial secrets that can help you maximise freelance income and make working from home even more satisfying.
You can reduce your rent
Renting office space means there’ll always be outgoings every month. Home-based working, however, allows you to make the most of your existing fixed property costs. As both mortgage interest and rent are allowable expenses, you can claim on them to reduce your tax liability.
Bear in mind that if you own your property, capital gains tax may be due on any parts utilised just for business (in the event it’s sold). Therefore, it’s best to ensure a workspace also has another purpose, such as a putting an exercise bike in your office to give it dual functionality as an exercise zone.
You can claim on utility expenses
As you’ll be spending more time at home, your utility bills will increase. Many bills are allowable expenses which can be claimed on, including gas, telephone, internet, electricity, water, and repairs. Apart from telephone and internet, you can claim on these using a flat rate – providing the hours worked from home per month tot up to at least 25.
The different flat rates depend on the hours worked: Up to 50 is £10, between 51 and 100 allows you to claim £18, and for over 100 it’s £26. This mean you won’t need to separate the home and business use, which would require calculating the attributable proportions.
You can cut down on travel costs
Many don’t live within walking distance of their workplace, and so need to rely upon crowded public transport or driving in rush hour traffic. Both these forms of commuting are costly, but with working from home, your travel costs will be precisely zilch, resulting in momentous cost savings.
And if you do ever need to take some form of essential business travel, such as commuting to a client meeting, then you can claim it as an allowable expense. To find out more about claiming and organising your travel expenses, this handy blog on managing your travel will help.
Bright Ideas support anyone who works from home, helping all freelancers understand their expenses and deal with the calculations. To book a FREE consultation with our experts, contact us today on 0161 669 4221 or info@biaccountancy.com.
