How to claim for council tax when working from home

How to claim for council tax when working from home

Over the years I’ve come to realise that not many self-employed people are aware of this but you can actually claim a proportion of your Council Tax as an allowable expense if you work from home! I know it sounds odd because you’re technically claiming tax on a tax, but it the proportion you use your home as an office is a completely allowable expense by HMRC.

Claiming Council Tax as an Allowable Expense

So there are two simple rules that come with claiming your council tax as an allowable expense in your end of year tax return:

1. You must work from home and file the expense under the ‘Rent, rates, power and insurance costs’ category as ‘Use of home as an office’
2. You can only claim the percentage which is proportionate to the amount of time you actually work from home

In order to calculate your percentage of ‘use of home as an office’ you will need to follow the steps listed in our previous blog here – https://zlogg.co.uk/how-to-calculate-percentage-of-business-use/ – or if you simply work a typical 5-day week then our friends over at Monthly Accountant (who use our Zlogg software!) have an expense calculator which will tell you the answer here – https://www.monthlyaccountant.co.uk/work-from-home-expense-calculator/.

So as an example of the sort of amount you can claim, let’s take an example of council tax equalling £150 per month. You work 8 hours per day (9am – 5pm) 5 days per week – this equals 160 hours. On average there are a total of 720 hours per month and using the equation listed above your 160 hours per month equates to 22% of time working from home. I know it’s quite shocking isn’t it as you think you spend your entire life working, but there you go!

So in this instance you can claim 22% of the £150 council tax bill = £33

I know it doesn’t sound much but when you calculate that over the year that’s a solid £330 per year you are able to offset against your tax bill! So it’s definitely worth remembering you can claim Council Tax if you are self-employed and work from home.