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HMRC internal manual

Business Income Manual

Subcontractors: expenses: use of home

Must set aside a definite part or proportion for business purposes

A deduction in respect of the business use of the subcontractor’s home depends on the nature and the extent of any business activity being carried on there (see BIM37665). If significant business activity is carried out in the home, a deduction will normally be due.

But such a deduction is only due where the subcontractor can show that a definite part or proportion of their home is being used for business purposes. See BIM37650 for guidance on how expenditure should be apportioned in these circumstances. Following the decision in Prior v Saunders [1993] 66 TC 210, a subcontractor cannot obtain a deduction for his own living costs by reclassifying expenditure on personal accommodation (no part of which is set aside exclusively for business use) as ‘use of home as office’ (see BIM37665).

For further discussion of home as office, see BIM47800.

Other common expenses

For guidance on the allowability of other common expenses of subcontractors see:

  • BIM66210 - travelling and subsistence expenses
  • BIM66220 - payments to spouses, civil partners or relatives