• area of the total property used in the business;
• usage;
• time the area is used for business use as opposed to any other use.

Revenue officers have been instructed to accept claims on any reasonable basis, and for those cases where the use of the home is minor, they have been advised to accept a reasonable estimate without detailed enquiry.

In the simplest cases the £2 a week deduction allowed for the employed working from home would be reasonable.

How to Apportion Home Costs
Specific guidance is given for a number of different household costs, some of which are worthy of particular note, because they have clarified the position.

Mortgage Interest: Confirmation that the interest may be split where no exclusive use but substantial use of part of the property for business purposes. 

Insurance: An apportionment of the total premium is allowable calculated as appropriate to usage and area, etc. 

Repairs and Maintenance: General household repairs are allowable in line with the proportion of the house used soley for business. General redecorating of the exterior or roof would be allowed on a proportionate basis, but decorating a room never used for business would not be allowed.

Equally, if a room were used soley for business, redecoration costs would be allowed in full.

Cleaning: Costs can be skewed depending on the circumstances, and cleaning is an example of this. It may be that the cleaner is not allowed to clean the business area and hence no deduction, or possibly that he or she specifically cleans that area and the time taken is disproportionately higher that a "normal" clean or another area of the house would be.

Telecoms/Internet Broadband etc: The Revenue's previous view that the line rental was not allowable has now changed, and a proportion of rental and calls is allowed on a reasonable basis. This includes giving consideration to the number of incoming calls, which should be supported by itemised bills.

The Revenue's manual suggests that a "flexible approach" be adopted when considering the level of deduction in respect of all inclusive telephone/broadband packages.


Capital Gains Tax - Restrictions or Residential Relief Use of Home for Exclusive Business
An individual's only or main residence is exempt on disposal from capital gains tax provided it has been used as his only or main residence throughout ownership, subject to various reliefs.

So how do income tax claims affect this relief? Provided that no room is used exclusively for business purposes, there should be no restriction on the availability of the main residence exemption from CGT.

How much of the gain attributable to business use must be decided on the facts of each case. The CG manual - CG64666, "Private residence relief: part of house used exclusive for business", contains guidance on such an issue. The exclusive use is a stringent one, and you should not usually seek any restriction to relief from a room that has some measure of regular residential use. But occasional and very minor residential use should be disregarded.

Source: Tax Advisor, Feb 2008, Penny Bates (extracted article)