A guide to the cost of living crisis for Limited Company contractors working at home
Working from home in the UK can be costly, especially considering the current cost of living crisis. It’s therefore more important than ever to review your energy consumption and other costs, so you can keep more of your earnings.
In this blog we’ll look at the best ways to reduce your bills as a Limited Company contractor when working from home.
Handle your heating
As we approach the winter months, heating expenses are likely to be the most significant cost of living when working from home. Here are some tips for reducing your heating bill:
- Heat only the room you’re working in. It may be tempting to put the heating on in the kitchen for your inevitable tea breaks, but resist the urge! Heating more rooms than necessary will quickly drive up your energy costs.
- Gradually turn down the thermostat. By slowly reducing the temperature, even by half a degree at a time, your body will start to adjust. Having your room be a few degrees lower could save you a lot in the long run.
- Make use of the sun. If you can, relocate your workspace to the room that gets the most sunlight and position your desk by the window.
- Use your smallest room. Where possible, use the smallest room in your house to work from as it will be the cheapest to heat.
- Consider your clothing. Jackets, boots and even USB heated gloves and blankets are a great idea to keep yourself warm. Remember, it’s almost always cheaper to keep yourself heated, than the room.
Watch out for ‘vampire appliances’
Appliances on standby consume nearly a quarter of the UK’s electricity. These energy-draining devices, known as vampire appliances, are often left on standby and not turned off at the wall. Examples include TVs, computers, phone chargers and kitchen appliances such as ovens and microwaves. These all use small amounts of energy constantly, even when on standby, but over time these can add up to a big cost. It’s a good idea to switch these off at the wall when they are not in use, especially overnight to help reduce your overall cost of living.
Get a smart meter
Having a smart meter is an effective way to stay aware of your energy usage throughout the day. It also helps you identify which appliances consume the most energy, and which may indicate it’s time to upgrade some of your older, less energy efficient appliances. With a smart meter, you can also keep an eye on the energy usage related to your Limited Company contractor work, such as running your computer or charging your phone.
A smart meter will also reveal how often you’re using certain appliances and the associated costs. For example, if you find you often end up putting the TV on in the background whilst you work, it may be worth limiting TV usage to lunch breaks only.
For those considering appliance upgrades or curious about their current energy usage, the Omni website offers a helpful online tool to calculate average costs per year based on device wattage.
Minimise travel costs
When negotiating contracts with clients, propose online meetings, such as on Microsoft Teams, as the standard and try to only meet in person when absolutely necessary. This will lead to huge savings in travel expenses, allowing you to work from home more often and reduce your overall cost of living.
Limit lunch break spending
Avoid shopping during your lunch break, as frequent small purchases can add up quickly. Planning your lunches ahead of time and staying away from the delivery apps can help you save money too.
Offset bills by increasing your prices
Nobody is immune to the effects of the cost of living rising. Therefore, raising your prices in accordance with the rising costs of everything else can help offset increasing bills. However, ensure you research competitive rates amongst other Limited Company contractors to avoid pricing yourself out of the market. Always communicate the price increase to clients in advance, along with a clear explanation for the adjustment.
Negotiate with suppliers
To reduce business expenses, negotiate better deals on services such as phone contracts and broadband. Whilst these individual savings might seem small, they can add up significantly over the year, leaving more money in your pocket.
Maximise tax breaks
Ensure you are claiming all the tax allowances and expense deductions available to you. Legitimately reducing your tax and National Insurance liabilities can significantly increase your take-home earnings.
How SG Accounting can help
At SG Accounting, we are committed to providing ongoing support to help you save money throughout the cost of living crisis, and beyond. Whether it’s understanding tax allowances, expenses, dividends, or finding ways to improve the running of your business, our team is here to help you keep more money in your pocket. For personalised advice, reach out to your dedicated SG Accountant, or if you’re not already a client and this sounds like the level of support and expert advice you need, get in touch today to find out more.
Note: All the information and advice in this blog post was correct at the time of writing.
