A Home Office Deduction allows Irish self-employed individuals and company directors to claim tax relief on a proportion of household running costs when using part of their home regularly and exclusively for business purposes, reducing taxable income.
Home Office Deduction is a tax relief available to self-employed individuals, freelancers, and Irish company directors who use part of their home exclusively and regularly for business purposes. You can claim a proportion of household running costs, such as heating, electricity, and mortgage interest or rent, against your taxable income or corporation tax liability.
This deduction recognises that maintaining a dedicated workspace at home generates genuine business expenses. Revenue allows claims based on the floor area used for work relative to your total home size, typically requiring the space to be used solely for business to qualify. For company directors, the deduction applies to your employment income if you work from home under specific conditions.
To benefit from Home Office Deduction, you must maintain records proving business use, such as utility bills and floor plans. This relief is particularly valuable for remote workers and startups operating from home offices, directly improving cash flow by lowering tax bills.
Qualification for Home Office Deduction requires using a specific area of your home regularly and exclusively for business. Self-employed individuals claim against Schedule D profits, whilst directors deduct from employment income if working from home due to employer requirements or nature of duties.
The space cannot double as a family room; it must be a dedicated office. Temporary use during COVID restrictions may not qualify retrospectively, but ongoing remote work does. Revenue scrutinises claims, so document business necessity clearly.
Calculate Home Office Deduction by determining the business use percentage of your home's floor area, then applying it to allowable household expenses. For example, if your office occupies 10% of total space, claim 10% of utilities, rates, and either mortgage interest, rent, or rent equivalent for homeowners.
Allowable costs include heat, light, insurance, and repairs, but exclude telephone or broadband unless separately quantified for business. Directors cap claims at reasonable amounts, often using simplified flat rates where available, simplifying record-keeping whilst ensuring compliance.
Maintain utility bills, council tax statements, mortgage or rent agreements, and floor plans showing office dimensions. Log business hours and purpose to prove exclusive use. Self-assessment returns require supporting computations, retained for Revenue inspections up to six years.
Photographs of the dedicated space strengthen claims during audits. Digital tools track proportional usage accurately, providing audit-ready evidence for your accountant.
Yes, directors can claim Home Office Deduction against employment income if working from home forms part of their duties or employer policy requires it. Claims go through PAYE adjustment or self-assessment, distinct from benefit in kind issues for employer-provided facilities.
Close companies face extra scrutiny to prevent abuse, requiring genuine business use. Proper documentation prevents reclassification as taxable benefits.
Qualifying expenses include proportion of utilities, council tax, home insurance, cleaning, and mortgage interest or rent. Repairs and maintenance qualify if attributable to the business area. Capital improvements like extensions may attract capital allowances separately.
Exclude private elements; only business portions claimable. Simplified flat-rate options exist for minor claims, easing administration for low-value deductions.
No statutory monetary cap exists, but claims must remain reasonable and evidenced. Revenue challenges excessive proportions or non-exclusive spaces. Directors in close companies risk benefit in kind recharacterisation if arrangements appear artificial.
Post-COVID, transitional rules eased some restrictions, but standard exclusive use criteria now apply fully. Consult your accountant annually for updates aligning with your financial year end.
