Work from home but refused work expenses allowance

tuux1598g

Hi,

I recently applied for tax-free work expenses allowance from my local tax office for the essentials that I require for working from home (phone line, internet and phone calls) - now I could have been unreasonable and also applied for % computer costs, electricity and all sorts, but I wasn't - I kept it sensible and reasonable.

They wrote back saying that I'm not eligible for any expense allowance other than a business phone call allowance (not even an explanation why!), so aparently I can do my job working entirely from home, online, without a phone line or internet connection - I may phone them up (from my mobile, the landline is purely for work) and ask them which miraculous new technology they are using to do this sort of thing...

anyway, is there any course for appeal for this? - they allowed me the call allowance but also stated that I underpaid last year and so owe them money (so my tax code actually got reduced as a result overall!!)


Cheers

lush_walrus

You have to be careful on this one, as it is a lot more complex than people give it credit. I can not remember the figures, but if you use a specific room to work from home, for x amount of time, then that room can be deemed to be business premises, and as such free from council tax, and liable for business rates. This may well be why they are stating certain things are not claimable for business expenses.

If you call them up they should be able to talk you though the figures as I haven't run any business from home for a long time, I can't remember them. Or cross fingers someone appears.!

Pennywise

Your home telephone rental is never allowable. The reason being that you would have it anyway.

The same logic may apply to your home broadband - you would have to prove that you wouldn't have it except it is a requirement of your work.

Phone calls are definitely only allowable for the business calls.

The tax inspector will be working on the basis that you have your home phone and broadband anyway so there is no EXTRA cost for business use.

You have to prove to them that your home costs are more because of working from home, that you have to work from home and that your employer is not paying those extra costs. The onus is on you.

HMRC allow a fixed £2 per week to cover all the extra costs of working from home - usually without argument - why not ask for this instead as I don't think you will win the argument about the home phone rental and broadband.

HMRC (perhaps quite rightly) expect your employer to finance your additional costs of working from home, especially if they asked you to do it.

roger56

Are you self employed or employed?

If you are self employed, you can claim for some of the items you mention.
Some may be capital expenditure, some revenue expenditure (mostly the items you mention).

If you are employed, then usually it's your employers responsibility to re-imburse you for such things.

This leaflet may help if you are an employee, read chapter 7:
http://www.hmrc.gov.uk/guidance/480.pdf

This is probably an easier read to start with:
http://www.hmrc.gov.uk/faqs/general.htm

roger56

Pennywise wrote:

Your home telephone rental is never allowable. The reason being that you would have it anyway.

The same logic may apply to your home broadband - you would have to prove that you wouldn't have it except it is a requirement of your work and be able to reasonably justify the proportion claimed.

Phone calls are definitely only allowable for the business calls.

If self employed this is not true. You can claim a reasonable proportion on phone / broadband bills if working from home. You should however keep all bills (for 6 years) in case the tax man wants to revue you returns. You should also be prepared to justify the proportion you claim.
If in doubt, use a qualified accountant.

roger56

lush_walrus wrote:

You have to be careful on this one, as it is a lot more complex than people give it credit. I can not remember the figures, but if you use a specific room to work from home, for x amount of time, then that room can be deemed to be business premises, and as such free from council tax, and liable for business rates. This may well be why they are stating certain things are not claimable for business expenses.

If you call them up they should be able to talk you though the figures as I haven't run any business from home for a long time, I can't remember them. Or cross fingers someone appears.!

You are absolutely right about Council Tax / Business Tax, I haven't found any clear guidance on that...am crossing fingers!

Hoddie_2

but if you use a specific room to work from home, for x amount of time, then that room can be deemed to be business premises, and as such free from council tax, and liable for business rates.

And possibly subject to Capital Gains tax if/when the property is sold.

tuux1598g

lush_walrus wrote:

You have to be careful on this one, as it is a lot more complex than people give it credit. I can not remember the figures, but if you use a specific room to work from home, for x amount of time, then that room can be deemed to be business premises, and as such free from council tax, and liable for business rates. This may well be why they are stating certain things are not claimable for business expenses.

I'm employed though, not self-employed.. I can understand this if you are running a business, but surely not just for working from home - its getting pretty common these days?

Pennywise wrote:

Your home telephone rental is never allowable. The reason being that you would have it anyway.

Thats what they say, however this is also my point to them, I wouldn't have it anyway - I have my mobile for personal calls, the landline is purely work and wouldn't be there if I didn't have this job

roger56 wrote:

Are you self employed or employed?

I'm employed, my job is 100% work from home and its in my contract that I am responsible for the purchasing of any equipment and internet connections to carry out the work - therefore they are a work expense (couldn't get much more clear-cut, but obviously the taxman wants to take everything as usual!).


Thanks very much for the comments, really appreciate all the help and information I can get on this one

Cheers.

Hoddie_2

therefore they are a work expense (couldn't get much more clear-cut, but obviously the taxman wants to take everything as usual!).

That's hardly fair. It is your employer that is costing you money, not HM Revenue & Customs.

To claim relief you must satisfy all the following conditions:

1. The duties performed at home are 'substantive duties' (ie all/part of the central duties of the employment.
2. Those duties cannot be performed without the use of appropriate facilities.
3. No such facilities are available on the employer's premises (or the nature of the job is that you must be based far away from the employer).
4. At no time (before or after signing any contract) have you had the choice of working at the employer's premises or at home.

Essentially, if it is your choice to work at home, or the choice of your employer that you work at home, then no relief will be due.

If your employment satisfies the above conditions, you can claim for the following:

1. Extra gas and electricity while a room is being used for work.
2. Any water used 'in the performance of duties' (ie not for cups of tea).
3. Business telephone calls (including "dial up" internet access where you are charged every time you connect).

You cannot claim for the following:

1. Council tax/rates.
2. Rent.
3. Water rates.
4. Mortgage (or similar).
5. Household insurance.

If you do satisfy the conditions mentioned above, you can claim relief on a flat £2/week. If you wish to claim more then you'd be required to keep records and be able to demonstrate that your claim is reasonable.

The above is a summary of the relevant guidance but if you're in any doubt you should speak to HM Revenue & Customs again, perhaps ask to speak to a technician who could consider your personal circumstances and give you a yay or nay either way.

bootman

I am waiting from a response from the tax office for the same thing. I wrote a letter dated 11th October, also faxed a copy to them 3 weeks agao and still not had a response!!!
I work from home 4 hours a day, the company office is shut when I work and too had no choice. I hope they dont say sorry no you can't have any relief.

Justin_Credit

Just think of all the travel costs you are saving by working at home too, this must offset the costs that your employers seem to have dodged.