Tax implications of working from home

sphwuss · 29 January 2008 at 3:42PM

Hello. I work for a UK based company as an area sales manager and I have a home office. I didn't choose to work at home, it's a requirement of my job and the location of my customers. I have converted one of my bedrooms for the sole purpose of having a home office for my work. I'm generally at home 2 days per week and on the road for 3 days. A little research has revealed that without keeping records I think I can claim £2 per week tax relief (hardly seems worth it!)against the expense of running my office. I'd like some advice on the following:

1, If I wanted to claim more than the £2 per week threshold, HMRC states that I would need to provide calculations and detailed records. I'd like to know if anyone is claiming more than the £2 week and how they have justified it (what are they claiming for?)

2, I'm considering building a small lean-to conservatory in my back garden for the sole purpose of working from home (as per above) and moving out of the main body of the house. Will my claim against tax be the same? Can I claim against tax for the building of the office?

Any advice on the subject would be greatly appreciated. Thanks.

fengirl_2 · 29 January 2008 at 4:36PM

If you want to claim the actual cost of running the room, you just need to keep all your gas and electricity bills. You would then claim the proportion of those bills relating to the office. So, if you have 3 beds and 3 receps, with one of the beds being the office, you would claim one fifth of the utiltiy bills. As you say, it probably won't make a lot of difference to £2 pw. You can't claim Council Tax or mortgage interest/rent as these would be payable whether you worked from home or not - you can only claim the additional expense which your work puts you to, although you might get away with some cleaning costs if you had a char.

You can't claim for the building of the additonal room as this is capital expenditure. Your claim for gas and electicity would be reduced to one sixth (based on my example above).

sphwuss · 29 January 2008 at 4:55PM

Thanks for your help Fengirl. My house has 4 bedrooms, with 2 living rooms and a dining room downstairs. Although I could not really work out of any of the rooms downstairs as they are being used, does this mean effectively I can only claim one seventh of the utility bills? (can I claim against the water bill?) My gas and elec bill is around £100 PM (and rising!) so it may still be worthwhile.

PasturesNew · 30 January 2008 at 2:41AM

Does it go by the number of rooms?

I was living alone in a house with 7 beds/receptions. But I only actually lived in one room. I used that room to work, live, sleep ... mainly because there was no point leaving one room, might as well have everything around you. And that meant I was only heating one room, so it made sense.

Nobody else ever came to the house. The other rooms existed but I never even went in them for weeks.

I was working about 15 hours a day 5 days a week and 10 hours a day for 2 days a week.

Would it be unreasonable to claim half the electricity/gas/water for the house as I was genuinely only living in one room?

(p.s. I have since sold that house and moved into a bedsit as it seemed to make sense)

fengirl_2 · 30 January 2008 at 10:05AM

Yes, you would claim one seventh of the bills, but not the water as you have to wash and go to the loo whether you work form home or not.
Pasturesnew: If you were only living in one room, I would guess you could negotiate the gas and electricity bills based on the number of hours worked over the number of hours in a week.

diamondgeezr · 8 February 2008 at 9:07PM

Hi, this is good news for me - I've been working from home since 2002.
How do you make a claim?
How far back can I go?
If I have 3 bedrooms, through lounge/diner and study - can I claim a fifth on my gas and electricity? If I'm out 50% of the time, do I only claim a tenth?

mrkbrrws · 9 February 2008 at 11:35AM

diamondgeezr wrote: »

Hi, this is good news for me - I've been working from home since 2002.
How do you make a claim?
How far back can I go?
If I have 3 bedrooms, through lounge/diner and study - can I claim a fifth on my gas and electricity? If I'm out 50% of the time, do I only claim a tenth?

Are you employed or self-employed?

fengirl_2 · 9 February 2008 at 11:44AM

yes, your claim would be a fifth of your gas and electricity. However, please note, it has to be a requirement of your job that you work from home - not just something that is done for convenience. It does not matter if you are on calls, etc for soem of the time, the allowance is designed to cover the cost of being there - which is when the gas and electricity would be used.
You can go back 6 yrs from 31 Jan 08 and you just send a letter to HMRC setting out your claim. I would also back it up by sending a copy of your employment contract stating that you are home based.

diamondgeezr · 9 February 2008 at 2:58PM

I'm employed by a major bank - they allow us to work from home to free up desk space, etc.
I wonder why they haven't explained to us about the tax implications?

Thanks for your reply Fengirl - very helplful.
I guess I'd better put pen to paper now.;)

fengirl_2 · 9 February 2008 at 3:44PM

I can't emphasise enough that it has to be a requirement from your employer.

Cook_County · 9 February 2008 at 10:20PM

To go back 5 or 6 years would require an error or mistake claim because HMRC has only recently changed it's practice. This carries risk of HMRC enquiring further once the year is re-opened.

As fengirl says your contract of employment has to require mandatory home-working where the employer does not reimburse any additional expenses.

So a school-teacher cannot claim because they could mark work in the library, on the bus, at a coffee-shop etc. Just because he or she chooses to do some marking at home does not mean the employer requires the work to be done only at that location.

Tax implications of working from home

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