Liv's Additions banner held by a woman with purple hair

Welcome to

Liv's Additions

February 2023

What expenses can be claimed when working from home?

Working from home is still a big thing and while lots of us are doing this it will be good to look at what you might be able to claim.

Deciding if an expense is allowable can be quite complicated but that is what we are here for, to ensure you claim everything you are entitled to claim.

Self-employed and working from home.

Rule of thumb here is if it is used ENTIRELY for business then you can claim it. This means you may also claim a PORTION of things like heating, rent, power, Council tax, etc.

There are two methods here that can help with this;

Not sure which method would be best for you? We can help and advise you.

Company owners/managers and working from home.

Being able to use the above methods do not work here as the company does not OWN the house nor do the flat rate fees apply to companies.

Instead, for rent/mortgage claims the company may be able to reimburse the owner £6 per week or the owner may be able to charge the company rent for the use of the house.

If you choose the latter then you must have a non-exclusive rental agreement in place between the company and the owner/manager which they will then have to claim for this on their own personal tax return. On this they can claim a portion of relevant expenses, this can be helpful if the owner/manager has high mortgage interest payments or rent (note that mortgage capital payments are not allowed to be claimed on).

For ease of record keeping and calculations the £6 per week would be our recommendation.

Employees and working from home.

The general rule here is that if your employer has asked you to work from home you may be able to claim tax relief for some household expenses.

Please do note that HMRC will not allow these tax relief claims if you CHOOSE to work from home.

For an employee, the way these working from home claims are determined depends on whether the employer makes a payment to the employee and can become complicated and confusing. We highly recommend seeking advice before you set out to claim these to make sure you get it right and get what you are entitled to.

HMRC does provide a working from home tool to check so employees can determine what they may claim.

Special COVID-19 relaxation

HMRC have eased up on the quite strict rules when it comes to employees claiming tax relief when they work from home for the 2020/21 and 2021/22 tax years for now.

If for those years only you have been told to work from home due to COVID-19 and general household expenses have risen because of them you may claim working from home tax relief, this is generally accepted especially when you get it in on time.

For the 2021/22 year, employees that qualify can claim the full year’s entitlement as long as they have been told to work from home by their employer, even if it was for one day during that tax period.

The best method to claim this is for £6 per week or £312 for a full year, it used to be £4 per week prior to 6 April 2020 - this is preferred because it avoids the need for an employee to keep records of their additional costs.

Restrictions when working from home

There are some instances when a claim could have an effect on the tax relief if you try to sell your home. Generous reliefs are obtainable, this means that when you sell your home, you will generally not pay any tax on the gain, as long as you have lived in the property as your home during your ownership and you had no other homes.

Although, if part of your home is used entirely for business purposes, this relief then does not apply to the business part of the gain and you could end up with a tax charge. Good news though HMRC makes it clear in its guidance that occasionally minor business use is ignored.

There are a lot of ways where you can claim the right expenses and reliefs when working from home, but you need to stay within the specified rules and the best way to do this is to ask for help!

Give us a call to make sure that you are getting all you can and to minimise any nasty tax surprises.