The tax office will allow you to claim a proportion of your household expenses against your taxable income if you are employed and work from home.
For any expense to be deductible then it must be incurred “wholly, exclusively and necessarily in the performance of the duties of the employment”. There are two main conditions to be fulfilled before you can make a claim.
Firstly, working from home must be a requirement of the job and not simply a matter of choice. Therefore, you would expect to see a clause in the contract or terms of employment specifying that a home office must be provided.
Secondly, there must be no non-business purpose to the expenditure. Unless this applies then it cannot fulfill the wholly and exclusively condition. However, the tax office does apply a “no-quibble” policy of accepting a claim of up to £3 per week without question subject only to the first condition being met. Claims above this amount should be supported by receipts.
The above applies to expenses incurred in working from home. However, there may in addition be a claim for the use of assets for your employment, such as desk, chair, bookshelves, computer, printer, desk lamp, etc. In the case of assets the wholly and exclusively rule does not apply, and the “Capital Allowances” available on these assets can be apportioned between private and business use, and the business element charged against taxable income.
The rules for claiming Capital Allowances are too complex for this article. However, if there are allowances of £200 available on a desk, and that desk is used for 5 hours a week for the purpose of your employment and 10 hours per week for private use, then £66 (one-third) can be claimed against taxable income. It should be noted that it is the proportion of use for employment against total use that is the allowable claim, not the use for employment against the total time for which the desk is available.
If you think that you have a possible claim for Capital Allowances that you have not made, then the tax rules will allow you to go back three years.
WatkinsonBlack are pleased to advise on these and other matters. They have considerable experience in these and other matters, including providing a very cost-effective payroll bureau service. We also offer a very cost-effective insurance against the cost of protecting yourself against these tax office fishing trips. If you want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us. Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.
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