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Penny & Pounds

Accountancy Services in Redcar

Tuesday 19th of February 2019

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Expenses of Working from Home

  • Posted by:
  • Admin
  • Tags:
  • Home Expenses, Expense Claims
  • Posted date:
  • 24-01-2019

Many employees currently do choose to. Spending more time at home will have implications for electricity, water, telephone and fuel bills. To reduce the high cost of the bills, you should consider informing HMRC because of its allowance. A person who has not been claiming allowance can now do it as far back as to the year 2012/13. The advantage of the allowance is that it is not taxed or subjected to NIC’s.

Many small business owners qualify for the allowance avoid claiming because they feel that their business office will then be subject to an audit. It is essential with qualification to take advantage of the allowance.

The huge challenge of secure these deductions is that it is mandatory to use part of your home on an exclusive and regular basis for business. Your office should be in a room or group of rooms that are separate. It can also be a section of your room if a division is clear and that personal activity will be distinguished from your business section. When working from your home, it should be considered as part of your job or a home-working agreement with an employer. It should be confirmed that it is part of the job you do. If your job is guided by home-working agreement, it is prudent for the employer to cater some of the expenses that you incur- £4 every week (2015-16) or more when your expenditure is proven more. You will not claim the allowance if your employer fails to contribute.

claiming business expenses

What Relief Can you get?

It is possible to obtain tax relief on a few of the bills that you pay because of handling a job from your home regularly. You should learn that claiming of tax relief would not be there when you work from your home.

You will claim for tax relief on things related to work only, for instance, the electricity you use, extra cost of gas or telephone calls of the business. You will fail to claim for those things, which cannot be distinguished to be private and business use like broadband access or rent.

hand working a mouse

You should note that the law is categorical and HMRC is clear on the exclusive-use requirement. In this case, you can devote a room for business use on full-time where you work for ten hours each day, seven days every week. Allowing your children to do assignments from the room will be a violation of exclusive use-requirement. 

This does not prohibit from making a personal phone call or not to address the needs of a family member from the home office. Some of the advisers have the idea that the criterion of exclusive use is met whenever the personal activities invade your home office more than that of the office building.

You should be aware that there is no clear definition of regular use. A person will, therefore, fail the test, when the use of an office is occasional and incidental for a business. You have an assurance of pass whenever you use the home office for some hours each day. The test is applicable to each circumstance and facts challenged by HMRC.