How to calculate percentage of business use
So when you claim certain expenses on your tax return you’ll need to work out the percentage of use for business – eg. If you work from home and were claiming back the cost of your electricity bill each month.
This is of course a totally allowable expense to claim back, but you can’t claim the whole amount, only the percentage you use for business.
So how do you do work this out? Three simple steps – let’s take the example of the electricity bill to show this.
1 – Work out how much time you use for business
You will be using 8 hours worth of electricity everyday (9am to 5pm), you work 5 days a week (40 hours of electricity), 20 days a month (160 hours of electricity)
2 – Work out much time there is used in total (including non-business time)
Let’s just average it out and say there are 30 days per month which is 720 hours of electricity being constantly used.
3 – Divide your ‘business time’ by the ‘total time’ and multiply that sum by 100
Simply divide your 160 hours by the month’s 720 hours and multiply that by 100 to get your percentage of use for business. For this example it equals 22%.
And that’s it! It really is that simple! You now know that 22% of all your electricity bills is tax deductible since that’s the calculated amount of time you use for business.
My one piece of advice when doing these calculations though is to keep a note of how you calculated this amount, just in case the HMRC ever want proof of why you were claiming the amount you were. If you have the calculations on record then there won’t be a problem 🙂
Share On