Expenses Allowed for Home Workers
There are a number of tax savings that can be made if you work from home, both on a self-employed basis and via a flexible working arrangement with your employer. You'll need to fill out a self-assessment tax return and ensure that everything is in line with HM Revenue & Customs guidelines.
Lucrative tax savingsWorking from home can provide benefits for both the employed and the self-employed. Employers find that staff are more productive if they are able to work from home, and it also helps them lower their overheads. For employees, the advantage of being able to fit work around a daily routine is beneficial, and it also allows them to save on the cost of commuting.
In addition, the savings made by a company may allow them to open up more job opportunities to others.
Annual tax formAs a self employed person working from home, you'll save money on commuting, which in turn frees up your time, allowing your to spend more time working and generating income.
Home working racks up costs you might not consider when thinking of starting a business and this could offset the savings made from travel. The cost of the relevant equipment required to turn your spare room into a suitable office space can be very high for example, as can the extra heating required if you are in the house all day long. Thankfully, heating and adapting office space can be claimed as expenses, and therefore deducted from your taxable income.
DeductiblesOther costs that can be deducted from your taxable income include lighting bills, broadband and telephone calls. Obviously, you need to display a direct correlation between the amount you are claiming to that which you are using. If you are working from one room in a three bedroom property therefore, you can only claim expenses on the heating and lighting for that room etc.
If you use a vehicle for work then you can also claim tax back at 40p a mile, but you must always keep a detailed log of mileage etc.
You may also be able to claim for services such as those charged by accountancy firms, but make sure you check the guidelines laid out by Revenue & Customs first. The department requires you to send in a self-assessment tax return every year, and only allows you to make claims for items that it deems to be “wholly, exclusively and necessarily in the performance of the duties of the employment”.
It may be worth seeking specific advice on financial assistance for buying a new computer for work for example as the rules are quite complex, and vary depending on specific circumstances.
Flexible working arrangementsIf you are not self employed, you may still be entitled to work from home. Although not legally obliged to accept, employees have the statutory right to request flexible working arrangements, if they have any children under the age of 16, or a disabled child under the age of 18.
There is no direct tax relief in these circumstances, but the employer can pay them £3 per week towards home expenses and that is not subject to tax and national insurance. More can be given if it can be proved that expenses are a direct result of working from home, but be sure to check with HM Revenue & Customs first.