The Covid-19 pandemic has changed the way in which many employees work, with many employers now looking to continue allowing their staff to work from home, either full-time or part-time.

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In this latest blog, we have listed some of the tax incentives you may be able to claim if you choose or are required to work from home.

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For employees:·  

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Employers can provide the equipment and supplies that an employee needs to work from home, such as office furniture, stationery, computers etc, without a taxable benefit arising. This is provided that ownership of the equipment remains with the employer and private use is not significant.

Employers can also pay employees a tax-free allowance of £6 per week (£26 per month) to cover the cost of additional household expenses incurred because of working from home. If employers do not pay the above allowance, employees can claim an equivalent deduction from their taxable income.

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For the self-employed:·        

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If you are self-employed and working from home, expenses are deductible if they are wholly & exclusively incurred for the purposes of the business. This will apply to costs incurred in running a home office, such as cleaning, heat and light, broadband & telephone costs etc.

If you don’t want to keep a track of actual costs you can claim the HMRC approved flat rate deduction of £6 per week.

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For Directors running a company from home:

Directors can charge their company a rent for use of a home office, but rents received in this way may be taxable income for the Director(s).

A company can meet costs paid by a director that are exclusively for business purposes.

Beware however that claiming for the exclusive business use of space in your home may create a capital gains tax charge when you sell your home. This can be avoided if there is a duality of use, i.e., your home office doubles as a spare bedroom or storage area.

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Please contact us if you want more information on this topic or have queries on any of the points mentioned above.

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