If your business is unincorporated and your business premises are also your home – eg, you run a bed & breakfast, guest house, pub, etc – working out what is the private element of premises costs and what is the business element can be time consuming and difficult to do.
Instead, you might want to consider a fixed rate adjustment to total expenditure to account for your personal expenditure. The monthly fixed rate adjustment applicable for 1 occupant is £350, for 2 occupants it is £500, and for 3 or more it is £650.
To calculate the total you can set off against profits for tax purposes, first of all tot up any expenditure that is incurred ‘mainly’ (ie, 51%+) for the purposes of running and maintaining the premises (eg, food, household goods, light & heat, cleaning, repairs & maintenance), then deduct the fixed rate adjustment.
This is much simpler than trying to assess the business and personal proportions of each element of relevant expenditure and, depending on your personal circumstances, it may well confer a tax advantage.
For example, Emma runs a B&B in Ambleside with 5 bedrooms. She occupies one bedroom, her daughter occupies another, and the other 3 are for guests. Total relevant expenditure is £25,000 p.a.
If that expenditure was apportioned (say) on the basis of rooms used personally compared to rooms used for business, Emma would have tax deductible expenditure of £15,0000 (25,000×3/5).
If she uses the fixed rate adjustment instead, she will have deductible expenditure of £19,000 (£25,000 – (2 x 500 x 12))
NB. Loan interest, business rates, council tax should be claimed in addition as a business expense, apportioned appropriately.