If you are a business owner and work or run your business from home, then you may be entitled to reclaim VAT on certain costs.
In practice, this means that you can reduce the amount of VAT you have to pay on business income against the amount of VAT you have had to pay on services rendered to your business.
What can I claim?
Legislation around VAT claims for business owners recognises that you may incur a range of different costs in the course of running your business.
You can claim some of the cost of working from home as a business owner on plant and machinery and other assets needed for your home office, including:
- A proportional percentage of your utility costs
- Office furniture such as a desk or desk chair
- Certain redecoration costs
- Security costs for sensitive documents
- Office cleaning costs.
You will need to report any home working expenses that you choose to reclaim VAT on through your VAT return.
Is there anything I can’t claim for?
In general, you can claim VAT costs on anything that you use for running your business from home.
However, some costs are more obviously business-related than others, such as office furnishings.
Remember to keep a record, including VAT receipts or invoices, of how much you have had to pay in relevant VAT costs as you may need to defend your decision to claim for certain items.
You should also consider whether a claim can be considered ‘fair and reasonable’.
For example, you should only claim for a reasonable proportion of costs such as heating or electricity.
One way of working this out could be the percentage of time in the day you spend in your home office, or the percentage of the floor plan it occupies.
With working from home becoming more common, there are likely to be further debates over what constitutes reasonable costs for VAT claims.
We advise that business owners keep an eye on regulations relating to reclaiming VAT and make sure that they keep accurate records in case any claims are challenged.
