Employed & work from home? Get tax relief from HM Revenue & Customs!

aeromint

Hi,

I am lucky to work from home, and I and some of my colleagues have approached the HMRC for tax relief and got it! My colleagues applied before 2011, and I have applied this year. I was asked for a lot more info in comparison to my colleagues! You must be prepared to answer a lot of questions and provide the requested evidence.

To meet their criteria, you must be able to demonstrate that the duties performed at home meet the following conditions.
- They are substantive duties of the e/ment. This means that the duties are an essential part of the job.
- They rep all or part of the main duties of the e/ment
- They are duties that can only be done using facilities that are not available on yr e/er's premises.
- They must not be duties carried out at home cos of personal choice.

HMRC may request info such as:-
- a copy of your job description & contract
- the no of working weeks that you did not work from home, such as,
being on holiday?

Also they may ask you to confirm the following:-
- are facilities available on yr e/yer's premises that would allow you
to carry out these duties? If there are then why do you perform these
duties @ home?
- Is the room in question used for any other purpose @ any time?
- Either b4 or after yr employment contract drawn up, have u been able
choose between working @ your e/yer's premises or elsewhere?

If you meet the conditions, tax relief can be given for:-
- additional cost of gas/elect, while a room is being used for work
- the metered cost of water used "in the performance of the duties" as
described above (if any)
- the unit cost of business phone calls

For the yrs 2006-07 & 2007-08 the rate was £2 per week
current yr it is £3 per week.

The tax relief can be backdated. I have been able to claim from 2006 onwards, and it was worth contacting HMRC.

As a result, I have also a new tax code.

I sent my letter to the address below:-

HM Revenue & Customs
Pay As You Earn and Self Assessment
PO Box 4000
CARDIFF
CF14 8HR

Good Luck!

SarEl

Yes, and don't forget to tell the Council that your home is now being used for business purposes so that they can increase your council tax payments (business use of premises) and your insurance company so that they can increase your premiums!

mildred1978

And look forward to paying capital gains on the area(s) used for work when you come to sell.

:doh:

antrobus

See http://www.hmrc.gov.uk/incometax/relief-household.htm

How much relief you can get

You can get either:

• A flat rate deduction of £3.00 per week (from 2008-09) for each week that you've got to work at home. This doesn't include the cost of business telephone calls.
• A larger amount if your extra expenses are higher than £3.00 - but you'll have to show how you've calculated the figure.

The rate for 2007-08 and earlier is £2.00 per week.

And 'working from home' does not equate with 'business use' and hence there is no liability for business rates, and the insurance company would be more likely to reduce the premium on the grounds that the property is now occupied during the day.

antrobus

mildred1978 wrote: »

And look forward to paying capital gains on the area(s) used for work when you come to sell.

:doh:

That doesn't apply either, so long as no part of the property is used exclusively for 'business'.

SALOPMAN

Hi, I am a Sales Rep and spent time at home during the week - I live in Shropshire and my office is in Surrey - which I havnt been to since 12 months ago, all comms is by tel/emails/fax etc - i use a small bedroom which I class as my office, is it possible to claim in this sort of set up???

SarEl

antrobus wrote: »

And 'working from home' does not equate with 'business use' and hence there is no liability for business rates, and the insurance company would be more likely to reduce the premium on the grounds that the property is now occupied during the day.

Incorrect. The definition used for council tax purposes is "working at or from home" or "business purposes" (which is what I said) - not "business use". This is the direct quote from the Valuation Office Agency guidance:
"If you work at or from home, the part of the property used for work may be liable to business rates (also known as non-domestic rates) whilst the remainder of the property will continue to be liable to council tax (although an alteration may be made to its banding).
To decide whether or not part of your property should be liable to business rates there are a number of things we have to consider, including the extent and frequency of the non-domestic (business) use of the room (or rooms) and any modifications made to the property to accommodate that use. Each case is considered on its own merits, and normally we will visit your property to check the facts before an assessment is made for non-domestic rates".

The same applies to insurance companies - being on the property more frequently does not necessarily mean that it is more secure - there is a reason why, on the proposal forms, you are asked the question, and it isn't to reduce your premium.

antrobus

In the circumstances outlined by the OP, and indeed for the overwhelming majority of people who 'work from home' for an employer, business rates is not an issue. It really, really isn't. Otherwise every teacher in the country who took some marking home would be getting a nasty surprise from the local council.

Simply claiming the £3 flat rate allowance for household expenses from HMRC is not going to trigger, a) a liability to business rates, b) a liability to capital gains tax, or c) a liability anything for else for that matter. Any more than claiming an allowance from cleaning workclothes at home will trigger such a liability. To simply tell someone that by claiming this allowance they will incur a liability to business rates is just plain wrong.

If you're self employed and actually running a business from the property, it's an entirely different question. But as far as the council is concerned, you're far more likely to get enforcement action as regards the change of use

SarEl

antrobus wrote: »

Otherwise every teacher in the country who took some marking home would be getting a nasty surprise from the local council.

There is a vast difference between some work from home, taking some work home, and working from home on a permanant basis. If you wish to dispute this I suggest that you do so with the Valuation Office Agency - they make the rules and the rules are as I quoted.

antrobus

SALOPMAN wrote: »

Hi, I am a Sales Rep and spent time at home during the week - I live in Shropshire and my office is in Surrey - which I havnt been to since 12 months ago, all comms is by tel/emails/fax etc - i use a small bedroom which I class as my office, is it possible to claim in this sort of set up???

Yes - "If you are employed specifically to work at or from home, and have no alternative but to do so". Simply doing some work at home doesn't qualify, you have to be required to do so by your employer. The trouble with being a sales rep is that the work you're required to is normally at client's premises and the rest of it is purely ancilliary.

In any case it's only an annual allowance of £156, so even at 40% tax that's only about a £1 week in your pocket, and if you're a decent salesman you can make more than that with just one extra sale.

antrobus

SarEl wrote: »

There is a vast difference between some work from home, taking some work home, and working from home on a permanant basis. If you wish to dispute this I suggest that you do so with the Valuation Office Agency - they make the rules and the rules are as I quoted.

This is really a Ye Very Olde Issue that goes back donkeys years. Back in the day the advice was, if you use a room in your home for business purposes, then make sure that you have evidence that it is also used for private purposes as well, so that you can demonstrate that it is not exclusively used for business. (Dual purpose as it is known.) The usual advice was normally along the lines of 'keep a record player in the room'. Or a sewing machine, or a spare bed. If necessary.

These days since working from home usually means using a laptop working off wireless broadband so that you can actually work whilst sunning yourself on the patio whilst sipping a pina colada it's of even less significance. And it really, really, really isn't an issue.