Andrew Needham looks at the VAT consequences of working from home and what a business can and cannot recover VAT on.
If a business is run from home or has an office at home, it is entitled to claim back the VAT on any legitimate business expenses. This means that if the business incurs extra costs in running the business from home, it can reclaim the VAT on those costs, as well as a proportion of the running costs of the house.
For example, if a company’s business operates from a director’s home and the office takes up 20% of the floor space of the house; HMRC will allow it to reclaim 20% of the VAT on the utility bills such as gas and electricity.
