Understanding Home Working Expenses for SaaS Founders
As a SaaS founder operating from home, you're likely incurring numerous additional costs that are legitimate business expenses. Many founders miss out on valuable tax relief simply because they're unaware of what HMRC allows them to claim. The key question of what can SaaS founders claim when working from home has become increasingly important as remote working becomes the norm for tech startups. Properly claiming these expenses can significantly reduce your corporation tax bill or personal tax liability, depending on your company structure.
HMRC recognizes that working from home incurs additional costs, and they provide two main methods for claiming these expenses: the simplified flat rate method and the actual costs method. Understanding which approach works best for your situation is crucial for maximizing your claims while maintaining full compliance. Many SaaS founders using our tax planning platform discover they've been significantly underclaiming for years, leaving thousands of pounds in potential tax savings unclaimed.
Simplified Flat Rate Claims
The simplest approach to claiming home working expenses is using HMRC's flat rate allowance. For the 2024/25 tax year, you can claim £6 per week (£312 annually) without needing to provide detailed records of actual costs. This method is particularly useful for founders who work from home occasionally or don't want the administrative burden of tracking every utility bill.
However, the flat rate method has limitations. It only covers additional household costs like heating, lighting, and broadband – it doesn't include telephone calls or business rates. For SaaS founders who work exclusively from home and have significant home office setups, the actual costs method typically yields higher claims. Understanding what can SaaS founders claim when working from home requires evaluating both methods to determine which provides the best financial outcome.
- £6 per week flat rate (no receipts required)
- Simple administration with minimal record-keeping
- Ideal for occasional home working
- Doesn't cover telephone call costs or business rates
Actual Costs Method for Maximum Claims
For SaaS founders with dedicated home offices and significant working from home patterns, the actual costs method typically provides substantially higher claims. This approach requires you to calculate the proportion of your household running costs that relate to business use. You'll need to determine what percentage of your home is used for business purposes and for how many hours per week.
A common method is to calculate the number of rooms used for business versus total rooms in your home, then apply this percentage to your total household costs. For example, if you use one room in a six-room house exclusively for business purposes, you could claim approximately 16.67% of your eligible household expenses. Our tax calculator can help automate these complex calculations to ensure accuracy.
Eligible expenses under the actual costs method include:
- Gas and electricity costs (proportion of bills)
- Council Tax (business proportion)
- Mortgage interest or rent (business proportion)
- Internet and telephone line rental
- Water rates (if relevant to your business)
- Insurance premiums for business equipment
Capital Allowances on Home Office Equipment
Beyond running costs, SaaS founders can claim capital allowances on equipment purchased for business use. This includes computers, monitors, office furniture, and other assets used primarily for your SaaS business. Under the Annual Investment Allowance (AIA), you can claim 100% of the cost of most plant and machinery up to £1 million per year.
For items used partly for business and partly personally, you can only claim the business proportion. If you purchase a £2,000 computer used 80% for business, you can claim £1,600 through capital allowances. This significantly reduces your taxable profits and is a key element of what can SaaS founders claim when working from home. Proper documentation is essential, and using dedicated tax planning software helps track these assets and their business use percentages automatically.
Specific SaaS-Related Expenses
SaaS founders have unique expense considerations beyond typical home office claims. Cloud hosting costs, software subscriptions (like GitHub, Slack, or project management tools), domain registrations, and cybersecurity software are all legitimate business expenses. These are 100% deductible if used exclusively for business purposes.
If you use your personal mobile phone for business calls, you can claim the business proportion of your contract costs. Similarly, if you have a dedicated business phone line, the entire cost is claimable. Understanding the full scope of what can SaaS founders claim when working from home means looking beyond traditional office expenses to include the digital tools that power your business.
Claiming Through Your Limited Company
Most SaaS founders operate through limited companies, which provides the most tax-efficient structure for claiming home working expenses. You can either have your company reimburse you for the business proportion of household costs or pay a rent to you for use of your home office space. The latter approach requires a formal license agreement and must reflect market rates to avoid benefit-in-kind tax implications.
Paying rent of up to £62 per month (£750 annually) typically doesn't create tax complications, but higher amounts may require you to declare rental income on your Self Assessment. This is another area where understanding what can SaaS founders claim when working from home becomes complex, and professional guidance through tax planning software can help navigate these rules.
Record-Keeping and Compliance Requirements
Regardless of which claiming method you choose, maintaining proper records is essential for HMRC compliance. You should keep copies of utility bills, mortgage statements, rental agreements, and receipts for all equipment purchases. For the actual costs method, you'll need documentation showing how you calculated the business use percentage.
HMRC can request evidence supporting your claims for up to six years after the tax year in question. Using dedicated tax planning software simplifies this process by providing digital record-keeping, automated calculations, and audit trails. This ensures you're always prepared if HMRC questions your claims.
Common Mistakes to Avoid
Many SaaS founders make simple errors that either reduce their legitimate claims or create compliance risks. Claiming 100% of costs for items used partly personally is a common mistake that can trigger HMRC investigations. Similarly, failing to apportion costs correctly or not maintaining adequate records are frequent issues.
Another common error is claiming capital allowances on items that don't qualify or missing opportunities to claim on eligible assets. Understanding the nuances of what can SaaS founders claim when working from home requires careful attention to HMRC's specific rules and guidelines. Our platform helps avoid these pitfalls through guided workflows and compliance checks.
Maximizing Your Claims with Technology
Modern tax planning technology transforms how SaaS founders approach home working expenses. Instead of manual calculations and spreadsheets, you can use automated systems that track eligible expenses, calculate optimal claiming methods, and ensure full compliance. This is particularly valuable for SaaS founders who need to focus on growing their business rather than administrative tasks.
By using specialized software, you can ensure you're claiming everything you're entitled to while avoiding common compliance pitfalls. The question of what can SaaS founders claim when working from home becomes much simpler when you have technology handling the complexity for you. This approach not only saves time but typically identifies additional savings that manual methods might miss.
If you're ready to optimize your home working expense claims, join our waiting list to be among the first to access our comprehensive tax planning solutions designed specifically for UK tech founders and small businesses.
