The pandemic has dramatically changed the way many of us work. As offices around the country closed, more and more of us have been working from home. However, this means that many employees and directors are now able to claim for extra expenses incurred which can be used against your next tax bill.
There are different rules applying to employees and directors, than to self-employed individuals. You can find out more about claims for self-employed individuals here.
I’ve chosen to work at home. What expenses can I claim?
If you have chosen to work at home, for example, as part of a home-working arrangement made between you and your employer:
• Your employer can reimburse your reasonable additional household expenses
• You must actually incur these costs and submit a claim to the employer
• You cannot claim a deduction for expenses that are not reimbursed by your employer
Claims could be made for:
• Light & heat
• Telephone calls – but not line rental unless it’s a dedicated work line
• Insurance – if business equipment is separately insured
• Repairs of business equipment
Is there an alternative?
As an alternative to submitting actual expense claims, your employer could pay you a homeworking allowance. Evidence of costs incurred is not required for this.
The homeworking allowance is £4 per week up to 5 April 2020 and £6 per week from 6 April 2020.
Please note that if your employer does not pay you the homeworking allowance then you cannot claim a deduction.
Directors could take the homeworking allowance through their loan accounts.
I have to work at home. What expenses can I claim?
For this to be relevant there has to be a contractual obligation for the employee to work at home, that is required by the employer and not chosen or negotiated by the employee.
This will also apply if you are required to work from home as a result of the Covid pandemic.
You can claim a deduction for reimbursed expenses as listed above.
You may also be able to make a claim if the expenses are not reimbursed, however you must be able to show that the expenses are incurred wholly, exclusively and necessarily in the performance of the duties of employment. This is a difficult test to pass.
The homeworking allowance is again available as an alternative: this time, you can claim a deduction whether or not your employer reimburses the costs.
In addition to the items above, employees could also claim capital allowances on business equipment or office shelving etc that they provide at home.
Employees cannot claim:
• Rent
• Mortgage interest
• Water rates or council tax
• Repairs or re-decoration of home office
• Actual expenses which are not supported by receipts
For those of you, who are new to claiming these expenses, it can be difficult to identify which option is the most beneficial for your situation, however if you have any questions at all please contact me for additional help and information.
