Working from Home Tax Relief
Tax Savings for Employees and business covering VAT, Home Costs and Equipment
Further information on the items discussed in the video
VAT Notice 700 – 32. Apportionment of tax between business and non-business activities
This section explains how to treat tax incurred on goods or services that are used only partly for business purposes
Claim tax relief for your job expenses
From 6 April 2020 your employer can pay you up to £6 a week (£26 a month) to cover your additional costs if you have to work from home. For previous tax years the rate is £4 a week (£18 a month).
You will not need to keep any records.
If you work at home voluntarily
If you’ve agreed with your employer to work at home voluntarily, or you choose to work at home, you cannot claim tax relief on the bills you have to pay.
https://www.gov.uk/tax-relief-for-employees/working-at-home
Simplified expenses if you’re self-employed
You can only use simplified expenses if you work for 25 hours or more a month from home.
| Hours of business use per month | Flat rate per month |
| 25 to 50 | £10 |
| 51 to 100 | £18 |
| 101 and more | £26 |
Example
You worked 40 hours from home for 10 months, but worked 60 hours during 2 particular months:
10 months x £10 = £100
2 months x £18 = £36
Total you can claim = £136
https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home
Specific deductions: use of home: apportioning the expenditure
The factors to be taken into account when apportioning an expense include:
- Area: what proportion in terms of area of the home is used for trade purposes?
- Usage: how much is consumed? This is appropriate where there is a metered or measurable supply such as electricity, gas or water.
- Time: how long is it used for trade purposes, as compared to any other use?
The method of apportioning an expense depends on the relative importance of each of these factors. There are examples at BIM47825.
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim47815
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Claim capital allowances
You can claim capital allowances when you buy assets that you keep to use in your business, for example:
- equipment
- machinery
https://www.gov.uk/capital-allowances
Other Points to Consider
- Capital Gains Tax
- Planning Consent
- Insurance
- Business Rates
- Benefit in Kind
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