Is it possible to claim a tax allowance for costs of being based at home? I started working for a company about 18 months ago, the office is 70 miles away, so I am officially based at home. I'm thinking of costs of heat, light, power for computer, internet broadband connection etc. I use a study, but this is not exclusively for work use.
I've looked on the Inland Revenue site and Google, but can't find any guidance. I spoke to an acquaintance earlier this year who is a tax inspector, he said I should be able to claim something as long as I don't go over the top. But how do I start working it out? Also, would there be any implications to council tax etc.
You are employed by this company, right? It might lend credence to your claim that you are incurring these costs "for work" if your employer did in fact reimburse them. That would also help to fix the proportion you estimate for a split between business and private use of heat and light for the study, and power and connectivity for the computer (there will be an element of private use of the computer too, presumably, not just of the study). There's also the possibilty of capital allowances for equipment. Who owns the computer?
If you go further than heating, lighting, and cleaning, by apportioning a share of the the share of the room as a fraction of the house, and charge that fraction of insurance, council tax, and mortgage to the work account, then there could be CGT implications when you sell, because the house won't have been in exclusive use as a private residence. This problem doesn't arise if you rent.
Council tax itself won't be an issue unless you ostensibly carried on a business there in terms of customers/colleagues coming round to visit all the time. That could involve application for partial change of use, you would get a reduction in CT but would be charged part business rates instead. You really don't want to go there, and simply working in a home office does not normally require formal consent for change of use. Consider that if it did, it could be denied. If renting, the landlord would need to get involved too.
If your "place of work" is your home, then if occasionally you do have to travel to the office 70 miles away, this would probably no longer be classed as commuting, and would become eligible for tax relief on business travel expenses: 25 to 40p per mile if by car.
Thanks for that advice. I am employed, but have not been offered anything towards costs at home. I was given a letter when I started which states that I am based at home. The company provides a laptop, and recently a printer (previously I used an old printer of my own, but they paid for ink).
I don't really want to "rock the boat" as I am really in a favourable position. I have a company car, because I travel around the country to see customers and if I travel to the office, then I claim expenses - so it doesn't actually cost me anything to go to work.
I don't want to go OTT, but if there's a bit that I can get back from the tax man, it might be worth doing.
I can't find specific Revenue leaflet/helpsheet on working at home, but most of it should be covered in a hefty tome called IR480 Expenses and Benefits. A Tax Guide. Should be available to view/download on their website. Basically if it's a condition of your employment that you work at/from home (and not just your personal preference, like occasionally taking work home for weekends), you can normally offset some of your household bills against tax. They include heat, light, repair, insurance, cleaning (if you pay someone, including your wife) and council tax. Proportion you can claim varies, but usually in the order of 25%. As for office equipment, phone bill and so on, you have to work out the proportion of business use and claim that portion. Before Self Assessment you agreed with your tax inspector what the proportion would be, but nowadays you simply enter the relevant amount on your return, keeping all your bills and record. If you do make a successful claim, there may be liability for capital gains tax when you sell up on the business part of your house, but only if you turn a part of your house exclusively for business, like a shop or full-time office.
That's OK, if it's an all-in package you can assume that your agreed salary is inclusive of those costs. It just means you don't have an independent corroboration for whatever figures you make up.
So you are. Imagine the commuting costs you would have otherwise, which would be non-recoverable.
Surely you could, if you *really* wanted to? *But* - you would need to ensure that you pay the correct tax for your "second employment" as well, the one where you are the cleaner. Overall, there is no real difference (you'd pay the same tax overall) - but you might want to do it eg to keep separate account of expenses here & expenses there??
"Ronald Raygun" wrote
This always puzzles me a little. Room sizes can vary substantially in a house - eg you could concievably have a large room 30ft by 20ft, and a 'box' room only 7ft square. One is 600sqft, the other only 50sqft. Suppose you have just 3 other 'rooms' (excluding kitchen/bathrooms).
Suppose you worked in the box room. Are you claiming too much expense for light/heat/etc?? [ (1/5) = 20% of total.]
Suppose you worked in the large room. Hmmm - costs a lot to heat & light. I know, why don't you add some partition walls to split it into 12 separate 'rooms' (each of equivalent size to the box room). You now have 16 rooms in total - can you claim 12/16 = 75% of household expenses??! :-)
In practice whilst only one room is used heating, lighting etc toilet still goes on. I live by myself and therefore I would have thought % of occupancy for business / private use of overall would be more appropriate in terms of "operating" costs, phone etc excepted.
I imagine the theory is that toilet and kitchen would be used in the same proportion. Each cup of tea you make or pee you take will be either private or business, depending on which room you were in immediately before and after using the kitchen/toilet.
I suspect you could not. The line would be taken, I think, that employing yourself on behalf of your employer amounts to your employer employing you in two capacities. So the second capacity is not an expense of the first.
Perhaps the assumption is that the room in question tends to be of "average" size so a simple count is a good first approximation. Perhaps in unusual cases you'd be expected to measure floor area, or even room volume.
Nice idea. Might work at first, if you could show that all 12 rooms were in full time business use. You could only be in one of them at any time, so that could be difficult. But perhaps if most of them were basically walk-in filing cabinets, that might be OK. However, a claim for 75% would certainly raise eyebrows and could cause the inspector to invite himself round for a cup of tea. Be sure to put it down as entertainment expenses.
If you want it to count, it will reduce your expenses, so best keep quiet, unless you propose making your hall into an office.
In practice, payment for cleaning and other services must be made to a third party (it could be your spouse/child) to be allowed as working expense. There must be evidence of money changing hands, for example by standing order if not by cash, and if spouse is employed the pay must be separate from any money you give for house keeping.
Again in practice, IR usually allows 25% without question. You need to justify if you want to claim more.
Annually, as taken from my P2(T) coding notice. Not a lot is it ? .. but better than nothing.
Best tax saving I've made recently is to get rid of the company car and get a van ( car benefit 2716, van benefit 500 ) Back in 2000 my company car tax benefit was only
1552 ... and Blair said he wouldn't raise taxes ? .... and before I get shot down my vehicle is an essential tool for my job as a field engineer, not a perk thrown in with a 9 - 5 office job.
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