Can I claim?
The costs associated with broadband services can be considered for tax relief but if you work from home the total will have to be adjusted accordingly (1). If you work out of premises dedicated solely to your business, the entire cost of the broadband service can be included (2).
(1) Self-Employed expenses - Use of Home as Office - Internet
(2) Self-Employed expenses - Office Space & Utilities - Internet
Being online is vital for many businesses, whether it's to access emails, use online invoicing tools or market services. Some types of work may be conducted almost entirely online, such as a virtual PA service.
For this reason, HMRC recognise that broadband is an allowable expense and permit it to be included in tax relief calculations. But there is an important distinction depending on where the work is being carried out.
If the business (and the broadband) is located in premises which are used solely and exclusively for the purposes of work, and not for any other reason, the entire cost of the broadband service can be offset.
But for many people, their business may be conducted at home, particularly if they are only accessing the internet to invoice, market or catch up on commercial correspondence. If the latter applies, only a portion of the broadband costs can be included in tax relief calculations.
You can either work out in precise and painstaking detail the amount of time you are spending on broadband use, and apportioning the same figure to the costs. If your home is used solely for business during working hours, you can take the example shown below for an 8 hours a day work week and calculate your yearly broadband expenses.
Flat rates on SimpleTax
If you wish SimpleTax to apply HMRC’s standard rate of £4 per week you can select the “Allowance” category under your Self-Employed expenses, "Use of home as office" or "Office Space & Utilities".
An alternative to this is to use the flat rates issued by HMRC. This means businesses don't have to keep up with the endless stream of receipts for costs and just assume a general home-as-office utility relief based on the number of business hours per week. If your hours of work are less, providing you work from home for at least 25 hours per month, there is a sliding scale of costs which can be applied, freeing you from the need to tot up the exact numbers. In this case you will need to calculate the amount and enter it under "Use of Home as Office: Other home office related expenses".
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