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Working from home - have you claimed tax relief on your expenses?

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Tax relief is available for additional expenses incurred by people working from home. A leading accountancy body is encouraging homeworkers to claim all the tax relief they are entitled to from HMRC.

Chas Roy-Chowdhury, head of taxation at ACCA, said:

“If you have to work from home, HMRC has a website that explains the benefits which are payable for home workers – tax relief is available for the extra household expenses that have to be paid if working from home.

Typically these extra expenses include;

1. The extra cost of gas and electricity to heat and light your work area

• Business telephone calls
• Use of a car – a percentage of tax relief is available based upon how much business use is incurred. In addition, a percentage of the 20% capital allowances may also available on your vehicle based upon the percentage of business use.
• You may also be entitled to a deduction for items used for your business – either a capital allowance deduction for computer equipment, or a straight forward deduction for some items such as stationery and paper.

Also, there are other types of tax relief available for those who are an employee of a company, but have to work from home:

• Flat rate deduction of £3.00 per week (from 2008-09) for each week worked at home. This doesn't include the cost of business telephone calls.
• A larger amount if extra expenses are higher than £3.00 - but the taxman will have to see how these figures have been calculated.

Roy-Chowdhury added: “HMRC makes it very clear that you will not be able to receive tax relief on domestic expenses that are being paid, such as mortgage payments. And no relief is available when it comes to using services such as phones and internet which are also used for personal usage. There has to be a clear demarcation.

“It is important to claim all tax reliefs if you are running a business from your home, or if you are working as an employee at home; however small the relief payments may be, it is still important to claim them. That old adage of looking after the pennies and the pounds will look after themselves, is certainly relevant in this case.”

Further Resources

• HMRC - Tax relief for household expenses when working from home - here
• HMRC - How to get allowances and reliefs (for directors and employees) - here
• Running a home office - can you claim expenses?

Posted October 28, 2008