3 Questions You Need to Ask Before Making Work from Home Claims

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Work from home arrangements has become increasingly popular because of safety and convenience. But, while it does have its benefits, this arrangement does pose some complications when it comes to taxes. Here are some of the answers to questions you may have about working from home so you can make the proper claims.

  • Did I volunteer to work from home?

This is the very first question you need to ask because it determines whether or not you can make claims in the first place. If your work from home arrangement was by choice, you are not entitled to tax relief claims on the bills you have even if they aid you in your work.

 

If working from home was not voluntary, then you may be able to claim tax relief. However, only bills that are used for work such as business calls or the extra cost of electricity are applicable. Items that are used for both personal and business use, like rent or internet access, cannot be claimed.

 

Note that some employers give their workers an allowance to cover the costs of working from home. If this applies to you, this allowance is tax-free up to £6 per week. However, you cannot make another claim on top of this. If your costs are higher than the employer’s allowance, then you can make additional tax relief, but you will have to provide proof.

  • The law considers that I can claim for bills I have related to the home, like heating or electricity since I use it for work. How do I claim a portion of my bills to cover these?

The HMRC recognizes that it can be difficult to apportion how much is allotted to work use for certain bills. As a solution, it provides a flat rate to cover the additional costs of working from home. From April 6, 2020, onwards, it allows claims of up to £6 a week for the expenses. Before this date, the rate was £4 per week. There is no need to provide proof like bills to justify the claim.

 

It is possible to claim more than £6 a week, but you will be required to provide paperwork to support the claim. A good example of this is the telephone bill. 

Records will have to be shown that there are business calls that exceed the £6 flat rate. Only the exact amount for business calls can provide tax relief. 

  • I bought equipment, like a computer or a new office chair. Can I make a claim on these?

The general rule with claiming tax relief on working from home in the UK is this: it has to be used “wholly, exclusively, and necessarily” for work. Items that are necessary for work like furniture or equipment are tax-deductible, but you must provide proof of the exact amount. Your employer must also not have reimbursed you for the cost.

 

Workspaces are no longer what they used to be. It used to be all about cubicles and closed offices and then open layouts became all the rage. Now, people do not even have to leave the house to work. But the nature of work is still the same – this is why a claim can be made. Learning to distinguish between the work items and the personal items is the key to taking advantage of the tax relief available.

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Annette Ferguson

Annette Ferguson

Owner of Annette & Co. - Chartered Accountants & Certifed Profit First Professionals. Helping Online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.