BIM47805 - Specific deductions: use of home: introduction

The home has a dual role for many self-employed people. It is where they live and also where they carry on some or all of their business. Even if they carry on most of their business 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 business purposes. Guidance on what is meant by part of a property being used solely for business purposes is at BIM47810.

Many of the bills for household expenses cover both business and private use. For example a self-employed person who uses electricity both privately and for business 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 business 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. There are also some special rules which mean that some revenue expenditure (for example on business entertaining, see BIM45000 onwards) is not allowable.

What is allowable depends on the particular facts, including the extent and nature of the business 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.