A Tutor’s Home is Expense-able!

I see tutoring clients in my home.  This means that some money I pay on my home can be written off as an expense but I do live there for my own personal use, as does my civil partner, so not all the money I pay can be written off. So how do I know how much to write off in the use of my home as an office limited company?

Firstly, make a chart with all the rooms in your home.

Room Name Business Use Room Quantity Percent of Room used for Business
Front RoomYes150%
Total75%4 Rooms32.5% 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:

Rent expense formula

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:

Rent expense formula

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.

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.