Rent, rates, power and insurance: what you can claim

This is the running-costs category for business premises: the workshop you rent, the salon's electricity, the public liability policy. If you work from home, most of these costs belong in the Use of home category instead — this one is for the premises your business occupies in its own right.

What you can claim

• Rent on business premises — office, workshop, studio or salon chair rental.
• Business rates — on commercial premises.
• Gas, electricity and water — for premises used by the business.
• Business insurance — public liability, professional indemnity, stock and equipment cover.
• Service charges and maintenance fees — for example on a serviced office or industrial unit.
• Trade waste collection — commercial bin and disposal contracts.
• Council tax on premises used wholly for business — where business rates don't apply.
• Security and alarm monitoring — for the premises.

What you can't claim

• Your home's full bills — only the business share belongs anywhere, and that share goes in Use of home.
• Household insurance — unless it includes a specific business element.
• Buying premises or building an extension — capital costs, not running costs.
• Late payment penalties on rent or rates — fines are never deductible.

Common mistakes

The most common slip is putting home bills here. If you rent your house and use one room for the business, the business share of the rent belongs in Use of home — keeping it there means nothing is claimed twice and your quarterly totals stay consistent with your accounts.

Annual insurance paid in a lump sum causes confusion too. Under cash basis accounting you claim it when you pay it, so a £480 premium paid in April sits in that quarter's update. Keep the policy schedule with your records so you can show what it covers.

Watch premises that are used partly privately — a garage that also houses the family car, or a shop with a flat above it. Claim the business share only, and note the split you used so your workings are ready if HMRC asks.

How to record it in your MTD tracker

Select Rent, rates, power and insurance for premises rent, rates, utilities, service charges and business insurance, noting which property each payment relates to. Anything that is really a share of your household costs goes in Use of home.