Trading from home

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

Many businesses can be run from home. This brings obvious advantages, such as lower costs and flexibility. Working from home is a particularly attractive option for fledgling businesses; they can then purchase or lease premises at a later stage when they have established a customer base and taken on employees.

Self-employed people who work at home are entitled to deduct part of the costs of running their home from their taxable profits. There may also be CGT and business rates implications. Each of these are discussed below.

Those who work as employees or directors are treated less generously, see the Homeworking guidance note.

The wholly and exclusively rule

Expenses are deductible for tax purposes if they are incurred ‘wholly and exclusively for the purposes of the trade’.

Relief is also allowed where any ‘identifiable part or identifiable proportion of the expense’ is incurred wholly and exclusively for the purposes of the trade. For more on ‘wholly and exclusively’ see the Wholly and exclusively guidance note.

‘Wholly and exclusively’ does not mean that part of the home must

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