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HMRC internal manual

Business Income Manual

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HM Revenue & Customs
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Specific deductions: use of home: introduction

The home has a dual role for many people who carry on a trade. It is where they live and also where they carry on some or all of their trade. Even if they carry on most of their trade elsewhere they are still entitled to a deduction for the part of the household expenses provided that there are times when part of their home is used solely for trade purposes. Guidance on what is meant by part of a property being used solely for trade purposes is at BIM47810.

Many of the bills for household expenses cover both trade and private use. For example, a self-employed person who uses electricity both privately and for the trade will normally get one electricity bill. A single bill does not mean that the whole of the expenditure is disallowable. The part of the cost attributable to trade use is allowable.

Capital expenditure (for example on improvements to the property) is not allowable expenditure; though plant and machinery allowances may be appropriate for certain qualifying expenditure, see CA20000 onwards. See BIM35000 onwards for further guidance on the capital/revenue divide. There are also some specific rules which mean that some revenue expenditure (for example on business entertaining, see BIM45000 onwards) is not allowable. See BIM42060 for a list of such prohibitive rules.

What is allowable depends on the particular facts, including the extent and nature of the trade activities undertaken in the home. The rest of this chapter explains the principles and how to work out the amounts in practice.

If there is only minor use, for example writing up the business records at home, you may accept a reasonable estimate without detailed enquiry.