UK sole trader (self employed) working from home (home office)

I understand the principle of splitting shared expenses between personal and business, i.e. rent+bills of the home office, internet, phone, transportation etc. But I’m not sure how to record the transactions correctly in Manager! Here’s what I’ve been doing:

  1. Rent+bills: paid monthly (£1200). I live with my wife in a 1 bedroom flat, split into 3 sections (living room, bedroom and kitchen/utilities). I carry out my work (I’m a market analyst) from the living room (avg. 4 hours per day, which is 25% of the time spent in the living room). So the business related proportion is as follows:
    £1200 ÷ 3 sections x 25% working time = £100
    And I record this in Manager as follows:
    Bank account > Spend Money > Payee: Landlord >
    Account (line 1) > Rent = £100
    Account (line 2) > Drawings = £1100
    Question 1: is this the right way of recording this transaction?
    Question 2: am I being reasonable with the £100 calculation? knowing that i.e. the simplified expenses method (as per HMRC) dictates that I cannot claim more than £26 per month.

  2. Internet bill > same as above (25% of the time on business) > same way of recording on Manager.

  3. Mobile Phone + Transportation > As I use cash basis > I use actual records (download statements from TFL (oyster) and my mobile line provider) and mark business related calls/trips. I record this in Manager as follows:
    1- Expense claim > Payer: “Me” > Payee “Oyster - TFL” > Account: “Transportation”
    2- Bank account > Spend Money > Payee: ?? >
    Account (line 1) > Expense Claim = £ cost of business trips
    Account (line 2) > Drawings = £ cost of personal trips

So, do you think I’ve got it right?

Sorry for the lengthy post, but this seems to be a tricky topic and I didn’t find a sufficient answer on the forum. Thanks in advance for your help.

Most of what you are doing is wrong:

  1. Anything you pay from personal funds that has a business purpose should be handled by an expense claim. When creating the expense claim, allocate to the appropriate expense category. There should be no bank account transaction at all because no company money was spent. In fact, from your other posts it appears you don’t have a business account, so you should not even be using the Bank Accounts tab.

  2. You have made no draw at all.

If you are not familiar with double-entry accounting, look at You really cannot use Manager without understanding double-entry accounting. And you may need the advice of a professional accountant on whether your expense allocations are reasonable and legal in your jurisdiction.

If you are going to run a business, you really need a separate business account.

Thank you for your reply Tut. However, I have to disagree… HMRC regulations allows sole traders to use the same bank account for business as well as personal use. so I don’t have to have a separate business account

You dont have to but if you want to make your accounts simple and easy to understand you need another account just for business.

I just opened another current account from another bank and use that account for all business transactions and kept my other account for personal.

It makes life SO much easier !!

@JONGAR, that was the point I was making. Many things are legal because the government does not care how hard life is for you. But the headaches of constantly trying to sort out personal and business expenses, let alone justify your actions if you are audited, are not worth the little bit of money you might save.

I don’t know where you are located, but there may well be a bank with a free small business account. I have such an account, and the only restriction to keep it free is that I cannot write paper cheques. But I do all my banking with a debit card and online cheques. Even if there was a monthly or per-transaction fee, it would be worth it.

Just to weigh in as I’m also a UK sole trader, I also support using separate bank accounts.

In my first year I mixed personal and business transactions in the one account and it quickly became an administrative burden even with a small turnover. Since separating personal and business finances, everything became much easier to reconcile, track and monitor both from a personal and a business standpoint.

If you’re a startup, you may be able to take advantage of free business banking offers for a year or two. Beyond that, I don’t know about free accounts but mine is a very affordable fixed monthly rate as long as it’s all electronic transactions.

Although as a sole trader there is no legal distinction between the business and the person, that doesn’t mean that everything can’t be kept separate from an accounting point of view.

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Thanks for your inputs mates! One question though, say I set up a business account and recorded all expenses, as they should be. How would I record the following expense items: rent, internet, oyster card and phone/mobile… knowing that:

  • I work from home (25% of rent, bills etc are business related)
  • 50% of internet, phone and oyster (transportation) are business related
  • I pay all of the above using my “personal” bank account!

Currently, when I make any of those payments, I split the record between “drawings” (personal) and “expense” (the relevant expense item i.e. rent)


Assuming you pay rent, etc. with personal funds, enter the percentage that applies to business as an expense claim, allocated to the appropriate expense account. Do nothing with the percentage that is personal. But of course, save all the documentation.