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Questions about working from home expenses for calculating income tax as a sole trader

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  • 24-03-2023 7:32pm
    #1
    grizzly_beer
    Registered Users Posts: 110 ✭✭


    I have been a sole trader for c. 3 years, making computer games and apps for clients and to put on stores myself. I have paid income tax a few times, but as I am new to this, I have just done the absolute basics.. I put in the amount of money I got from clients or from sales of my games as income and my expenses are all computer hardware or software or licenses I've bought in order to do my job.

    I am wondering can I add more business expenses and therefore pay less tax. As I get more experience with this I can add more stuff and become more accurate.

    I work from home and I am wondering can I put these home related expenses (or part of them) as business costs, and also if how what section do I put them in the form 11 on the tax website, and how do I calculate them?

    1. Internet.. I am paying for the most expensive internet I can get as its vital for my work, and I constantly use it for work.. I essentially cant work at all without it.
    2. Electricity.. Obviously I need this for work and the various computers and devices I use for work use a lot of juice.
    3. Rent.. I need somewhere to work, and I am renting the space I work in, so it seems reasonable that at least part of my rent is a business expense.

    Thanks!

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    #2
    SureYWouldntYa
    Registered Users Posts: 7,724 ✭✭✭SureYWouldntYa


    The guidance from Revenue is if the expense is wholly, exclusively and necessary for the business

    You can claim a portion of the expenses based on the additional expenditure incurred due to you working from home, as even if you didn't work from home you would have to pay these expenses privately

    For internet perhaps claim 25% of the cost or whatever the additional cost is above the basic package. For electricity perhaps the same amount, if you have bills from before you started working from home and the additional usage has meant an increased cost (not just an additional cost because of unit increases). For rent there have been cases where Revenue have been known to look at the size of the home office relevant to the rest of the house (ie 10% of the square foot area of the house), so perhaps be careful how much you claim here

    I believe there is a box on the expenses section for rent payable, and the others could go in as general expenses

    While not technically correct if you have the details you could include the costs for the previous years that you have not previously claimed onto this return



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