Firstly, make a chart with all the rooms in your home.
|Room Name||Business Use||Room Quantity||Percent of Room used for Business|
|Total||75%||4 Rooms||32.5% Business Use|
So, I have four rooms: The Front Room, The Office, The Toilet and The Bedroom. I use three of these rooms for business, ergo, 75% of my home is business use because 3/4 is 75%. Then, within those three rooms individually, I use the Front Room 50% for business (Sitting Clients down, Online Tuition, Face-to-Face Tuition, Storing Learning Resources), I use the Office 75% for business (Business Email and Calls, Bookkeeping, Record Storage), and clients use the toilet 5% (Hey, even clients gotta go!). So… where r is Rent, x is Percent of rooms used for business and y is Average Percent of rooms used for business you can write off your Rent as follows:
Breaking Down The Maths
Rent (r) = 1,200
Percent of Rooms Used for Business (x) = .75
Average Percent of Rooms Used for Business (y) = .325
Now, don’t forget if you have a spouse or a housemate, you need to divide your rent in half, so that you denote your cohabiter’s contributions. So if my rent is £1,200 but I live with one housemate (who is my spouse) then the formula is tweaked where hm is Number of Housemates:
This formula can be used for calculating expenses for running your home relating to rent, gas, electric and council tax. However, you can’t write off your water bill, unless you are tutoring a water-related subject and using loads of water: e.g tutoring in MSc Water Science and tutoring with hundreds of gallons of the stuff, perhaps? If all this math is a bit too much for you to handle, you can do simplified taxes and use the government’s simplified expenses. HMRC even gives you a calculator for this.
This could work well if you live and tutor outside of London, however, if you live in London you will probably be better off doing the long division.
Tutor Tax Expense Spreadsheet
Next: Hope you enjoyed this blog on the Use Of Home As Office Limited Company, why don’t you read the complete guide on Paying Self Employment Tax as a Tutor
Credit: Information taken from FreeAgent blog.