Making Tax Digital · Sole traders
Translators and copywriters: calculating business use of the home
ONLY£15A MONTHWorking from home can create deductible business costs, but the method needs a clear basis.
Working from home can create deductible business costs, but the method needs a clear basis. Translators and writers should compare the relevant simplified-expenses option with an appropriate share of actual costs. The largest-looking number is not necessarily the correct claim.
Choose a supported method
For eligible self-employed people, simplified home-working expenses depend on qualifying hours worked at home each month. The monthly rates are £10 for 25–50 hours, £18 for 51–100 hours and £26 for 101 hours or more. HMRC explains the home-working rates.
Alternatively, calculate a reasonable business share of eligible actual costs. Rooms, area and time can be relevant, depending on the property and use. There is no universal instruction to divide every bill by the same number of rooms.
Review separate bills and exclusive use
The simplified home-working amount does not cover telephone and internet costs; assess their business share separately. Translation software, reference subscriptions and equipment also require their own treatment.
Using part of a home exclusively for business can affect relief when the home is sold. HMRC's home-sale guidance identifies this issue. Record the real use of the space rather than inventing private use merely to obtain a preferred tax result.
Worked example: qualifying hours vary
A writer works 80 qualifying hours at home in one month and 120 in the next. The relevant simplified amounts are £18 and £26, giving £44 for those two months.
The writer separately assesses business telephone and internet use. They do not add the same household costs again under an actual-cost calculation for those months.
Start with the business purpose
An expense category describes a cost; it does not decide whether the cost qualifies for relief. The starting point is whether the spending was for the trade. Where an identifiable part was private, keep that part out of the claim. A personal withdrawal is not an expense simply because it leaves the business bank account.
HMRC's self-employed expenses guide explains the distinction between running costs, capital expenditure and private use. For example, a supplier may sell both equipment and household products. The shop's name is useful evidence, but the invoice tells you what you bought.
Record the full transaction and the business calculation clearly. If a £120 bill has £30 of identifiable private spending, a £90 business claim is easier to explain when both amounts and the reason for the split are retained. Do not delete the private part merely to force the bookkeeping total to resemble the tax deduction.
Nor is a deduction a reimbursement. Spending £100 to save a fraction of that amount in tax still leaves you with a real cost. Buy what the business needs, keep appropriate evidence and claim the relief available under the correct rules.
Give equipment its own review
The tax treatment of equipment depends on the accounting basis and the asset, not just its price. Under the cash basis, many business equipment purchases are deducted when paid. Cars and certain other expenditure are exceptions. Under traditional accounting, a purchase with lasting business use may instead enter the capital-allowances calculation.
HMRC's capital-allowances guide explains the available routes. Annual Investment Allowance can cover qualifying plant and machinery, subject to its conditions and limit, but it does not apply to cars. Accounting depreciation is not itself the tax deduction.
Keep the purchase invoice, date, payment evidence and any finance agreement. A finance instalment can combine capital and interest, so treating every payment as an ordinary running cost may give the wrong answer. Record private use where relevant and retain the disposal paperwork when equipment is sold or part-exchanged.
For an expensive or unusual purchase, resolve the treatment before relying on a tax estimate. A category chosen from the merchant name cannot tell you whether an item was bought outright, leased, used privately or acquired as part of a larger building project.
Keep the evidence connected to the figures
Your digital record should explain the amount, date and nature of the transaction. Keep the invoice, receipt, statement or other evidence that supports it. A photograph can make a paper document easier to retain, but a folder of photographs alone does not create complete transaction records.
For sole traders, HMRC normally requires business records to be kept for at least five years after the relevant 31 January filing deadline. Keep them longer where the rules for a late return, enquiry or other circumstances require it. Check the record-retention guidance.
Make the records usable by your future self. Include a short explanation where a bank description is vague, retain the calculation behind a business-use split and make corrections traceable. For a missing receipt, try the supplier account, email confirmation or a replacement invoice before relying on incomplete evidence.
At review time, compare your records with the bank or payment account and investigate differences. Equal totals are useful, but two errors can cancel each other out. A sample of individual transactions can reveal a duplicated purchase or an omitted customer receipt that a totals-only check misses.
Keep the calculation repeatable
Record monthly hours or the evidence behind an actual-cost allocation, retain the bills and review material changes in how the home is used. Check equipment separately. Your records should allow you to reproduce the claim without reconstructing an entire year from memory.
Take the next step
Avona.app offers a self-service route from £15/month. Bring your records together, review the figures and choose a workflow that fits your business. For professional help, discuss the scope and total price of Avona Concierge, managed by chartered accountants, before choosing a service.