Working from home expenses

Bossworld

Don't know if anyone can offer any guidance, in my current role I used to get a pro-rated 3/5ths remote working allowance as I was based from home 3 days a week.  That's temporarily been topped up to the full amount.

I'm leaving the company and starting a new job next month.  My permanent place of work in my new contract is the head office, but I'll be permitted to work from home 90% of the time.  I won't be getting a homeworking allowance in the new place.  Can I apply for this tax relief once I start the new role?

Jeremy535897

kev1960 said:

I  would not normally  get involved with chats like this as everybody has different opinions i.e saving on commuting covers the extra cost or is it worth claiming it etc. and no one will ever win.
 In my opinion it is not a question of cost versus  savings,  it is the fact that the entitlement is there, so it is your right to claim.
There are plenty of unscrupulous  employers out there who have abused the furlough system and in the long run it will be  legitimate tax payers who will be expected to refill the government coffers.
If you don't want the money then don't claim but don't vilify those that do,
or alternatively you can always claim it and give it to charity.

I do have one query though, does working from home  affect your home insurance policy as one of the questions normally asked- is your home used for business purposes? which normally would be no if you don't normally WFH but it may be construed by the insurance company that this is not the case if you are WFH.

Most insurers distinguish between working from home as an employee (not normally a problem, but check how any employer provided assets are covered), and running a business from home as a self employed person, which may be in breach of standard house cover terms. 

p00hsticks

Bossworld said:

My permanent place of work in my new contract is the head office, but I'll be permitted to work from home 90% of the time.  I won't be getting a homeworking allowance in the new place.  Can I apply for this tax relief once I start the new role?

'Permitted' or 'instructed' ?

You are only supposed to claim the tax relief if your employment contrat says that you have to work from home, not if you choose to.

https://www.gov.uk/tax-relief-for-employees/working-at-home

Tim11111000111

kev1960 said:

I  would not normally  get involved with chats like this as everybody has different opinions i.e saving on commuting covers the extra cost or is it worth claiming it etc. and no one will ever win.
 In my opinion it is not a question of cost versus  savings,  it is the fact that the entitlement is there, so it is your right to claim.
There are plenty of unscrupulous  employers out there who have abused the furlough system and in the long run it will be  legitimate tax payers who will be expected to refill the government coffers.
If you don't want the money then don't claim but don't vilify those that do,
or alternatively you can always claim it and give it to charity.

I do have one query though, does working from home  affect your home insurance policy as one of the questions normally asked- is your home used for business purposes? which normally would be no if you don't normally WFH but it may be construed by the insurance company that this is not the case if you are WFH.

For most insurers, working at home in a normal office-style job is fine. "Using your home for business purposes" might involve receiving or storing goods, having meetings in your home etc. - something that might increase the risk or potential liability to the insurer. Simply being at home on a computer all day normally means lower risk to the insurer (as lower risk of theft etc.) and so they are fine with it.

 However, if you're not sure you can always give your insurer a call/email and ask them to confirm.

Jeremy535897

p00hsticks said:

Bossworld said:

My permanent place of work in my new contract is the head office, but I'll be permitted to work from home 90% of the time.  I won't be getting a homeworking allowance in the new place.  Can I apply for this tax relief once I start the new role?

'Permitted' or 'instructed' ?

You are only supposed to claim the tax relief if your employment contrat says that you have to work from home, not if you choose to.

https://www.gov.uk/tax-relief-for-employees/working-at-home

Reasonable reimbursements (up to £6 a week being automatically regarded without evidence as reasonable) by the employer for homeworking arrangements are exempted by section 316A ITEPA 2003, which provides:

"316A Homeworker’s additional household expenses

(1)This section applies where an employer makes a payment to an employee in respect of reasonable additional household expenses which the employee incurs in carrying out duties of the employment at home under homeworking arrangements.

(2)No liability to income tax arises in respect of the payment.

(3)In this section, in relation to an employee—

• “homeworking arrangements” means arrangements between the employee and the employer under which the employee regularly performs some or all of the duties of the employment at home; and

• “household expenses” means expenses connected with the day to day running of the employee’s home."

For a claim by an employee, the stricter test in section 336 ITEPA 2003 applies, and the "necessarily" test means the employer must require it, and for a good reason (usually because the work can only be done from the employee's home, or the employer is based an unreasonable distance from the employee's home to commute to):

"336 Deductions for expenses: the general rule

(1)The general rule is that a deduction from earnings is allowed for an amount if—

(a)the employee is obliged to incur and pay it as holder of the employment, and

(b)the amount is incurred wholly, exclusively and necessarily in the performance of the duties of the employment.

(2)The following provisions of this Chapter contain additional rules allowing deductions for particular kinds of expenses and rules preventing particular kinds of deductions.

(3)No deduction is allowed under this section for an amount that is deductible under sections 337 to 342 (travel expenses)."

EIM 32830 explains in more detail:

"Other expenses: home: household expenses: relation between deduction for employee’s expenses and exempt homeworking payments: examples

Sections 316A and 336 ITEPA 2003

Example 1

An employer introduces a homeworking policy under which employees who wish to work from home may do so. The employer makes a payment of £6 per week towards the additional household expenses of those employees who decide to work from home. The £6 per week is exempt from tax under section 316A ITEPA 2003 (see EIM01472 onwards). However, employees who can show that working from home costs them more than £6 per week are not able to obtain a deduction for the excess under section 336 because they are working at home by choice. The conditions for relief under section 336 are more restrictive than the conditions for exempt payments under section 316A.

Example 2

The North of England representative of a company whose only offices are in London is entitled to a deduction under section 336 ITEPA 2003 for the expenses of working at home. He produces evidence that his additional household expenses, allowable under section 336, amount to £6 per week. However, his employer makes a contribution of £5 per week towards those expenses. That contribution is exempt from tax under section 316A. The amount the employee is able to deduct under section 336 is therefore £1 per week, being the difference between his allowable, additional expenditure of £6 per week and his employer’s reimbursement of £5 per week."

There isn't anything that says that a recommendation by government to work from home if possible supersedes the above requirements.

MallyGirl

unholyangel said:

KJK_2 said:

For some of us we didn't spend very much on commuting as I only live a few miles from work and I took my own lunch in. However as I live in an old property with no insulation I estimate it will probably cost me an extra £20 per week to heat my home over Winter. I am on a very low income to start with and so this is a lot of additional expenditure for me to find. Yes I am appreciative that I have a job but at this rate I will have to borrow to pay my energy costs to get through the Winter which hardly seems fair when I work for a highly profitable company.

An extra £20 a week to heat one room for 40 hours? Where the heck are you living, buckingham palace? 

Is it maybe time to upgrade the heating system? My bills dropped dramatically when I upgraded mine. Although apparently my boilers top end, or so the gas engineers who service it keep telling me. But it made a huge difference to my bills. More than halved them, and my old boiler wasn't even bad to start with! 

Depending on the construction and design of your house bills can vary massively. My Victorian pad with single glazed sash windows, no cavities in walls to insulate, big crawl space under the floorboards downstairs, and high ceilings means my bills are astronomical. We don't heat some of the rooms but the sheer length of copper piping means there is a lot of heat loss. A new boiler helped with capacity but not bills.
My office is at the bottom of the garden so is electrically heated (no tank/gas/boiler) and that is an expensive way to do it. Warming hands round a cup of tea while your toes go blue is no fun.
Luckily I have always been a homeworker - for which I have been, and continue to be, very grateful - and I do get an allowance but it hasn't been changed in the 16 years I have received it (and no one really knows what it covers).

Bossworld

p00hsticks said:

Bossworld said:

My permanent place of work in my new contract is the head office, but I'll be permitted to work from home 90% of the time.  I won't be getting a homeworking allowance in the new place.  Can I apply for this tax relief once I start the new role?

'Permitted' or 'instructed' ?

You are only supposed to claim the tax relief if your employment contrat says that you have to work from home, not if you choose to.

https://www.gov.uk/tax-relief-for-employees/working-at-home

My new place of work is 300 miles away, so it's somewhat ambiguous, though I take your point.  Contractually, I would have to be there at least once a month (for a couple of days at a time) if not twice a month, but at the minute, all staff are working from home.  Grey area then?  Your link says 'have to work from home'

"Your initial place of work will be (LONDON OFFICE) or as (ORGANISATION) may require you to work within the UK, although you will be permitted to work flexibly from your home (subject to business needs from time to time). As at your start date, you will be required to travel to (LONDON OFFICE) a minimum of once a month for 2-3 days per trip.  "

EDIT: Jeez, what a mess.  #3 doesn't particularly help my cause but I'm not sure how much of a 'choice' it is.  For the sake of a few quid looks like I'll get it during Covid but not after.
https://www.att.org.uk/home-sweet-home-–-tax-relief-home-working#:~:text=Only additional costs incurred by,home such as building alterations.

Which employees are eligible?

In order to claim tax relief, the employee must show that their home is a workplace. HMRC will accept that a home is a workplace where:

1. The employee performs substantive duties at home. Substantive duties are the tasks that employees must carry out which form all or part of the central duties of their employment. 
2. The duties require the use of appropriate facilities and such facilities are not available to the employee on the employer’s premises. (Or the employee lives so far away from the premises it is unreasonable to expect them to travel there on a daily basis.)
3. At no time before or after the employment contract is drawn up is the employee able to choose between working at the employer’s premises or elsewhere.

Bossworld

Jeremy535897 said:

p00hsticks said:

Bossworld said:

My permanent place of work in my new contract is the head office, but I'll be permitted to work from home 90% of the time.  I won't be getting a homeworking allowance in the new place.  Can I apply for this tax relief once I start the new role?

'Permitted' or 'instructed' ?

You are only supposed to claim the tax relief if your employment contrat says that you have to work from home, not if you choose to.

https://www.gov.uk/tax-relief-for-employees/working-at-home

Reasonable reimbursements (up to £6 a week being automatically regarded without evidence as reasonable) by the employer for homeworking arrangements are exempted by section 316A ITEPA 2003, which provides:

"316A Homeworker’s additional household expenses

(1)This section applies where an employer makes a payment to an employee in respect of reasonable additional household expenses which the employee incurs in carrying out duties of the employment at home under homeworking arrangements.

(2)No liability to income tax arises in respect of the payment.

(3)In this section, in relation to an employee—

• “homeworking arrangements” means arrangements between the employee and the employer under which the employee regularly performs some or all of the duties of the employment at home; and

• “household expenses” means expenses connected with the day to day running of the employee’s home."

For a claim by an employee, the stricter test in section 336 ITEPA 2003 applies, and the "necessarily" test means the employer must require it, and for a good reason (usually because the work can only be done from the employee's home, or the employer is based an unreasonable distance from the employee's home to commute to):

"336 Deductions for expenses: the general rule

(1)The general rule is that a deduction from earnings is allowed for an amount if—

(a)the employee is obliged to incur and pay it as holder of the employment, and

(b)the amount is incurred wholly, exclusively and necessarily in the performance of the duties of the employment.

(2)The following provisions of this Chapter contain additional rules allowing deductions for particular kinds of expenses and rules preventing particular kinds of deductions.

(3)No deduction is allowed under this section for an amount that is deductible under sections 337 to 342 (travel expenses)."

EIM 32830 explains in more detail:

"Other expenses: home: household expenses: relation between deduction for employee’s expenses and exempt homeworking payments: examples

Sections 316A and 336 ITEPA 2003

Example 1

An employer introduces a homeworking policy under which employees who wish to work from home may do so. The employer makes a payment of £6 per week towards the additional household expenses of those employees who decide to work from home. The £6 per week is exempt from tax under section 316A ITEPA 2003 (see EIM01472 onwards). However, employees who can show that working from home costs them more than £6 per week are not able to obtain a deduction for the excess under section 336 because they are working at home by choice. The conditions for relief under section 336 are more restrictive than the conditions for exempt payments under section 316A.

Example 2

The North of England representative of a company whose only offices are in London is entitled to a deduction under section 336 ITEPA 2003 for the expenses of working at home. He produces evidence that his additional household expenses, allowable under section 336, amount to £6 per week. However, his employer makes a contribution of £5 per week towards those expenses. That contribution is exempt from tax under section 316A. The amount the employee is able to deduct under section 336 is therefore £1 per week, being the difference between his allowable, additional expenditure of £6 per week and his employer’s reimbursement of £5 per week."

There isn't anything that says that a recommendation by government to work from home if possible supersedes the above requirements.

I apologise as I'm not sure if I'm getting the site set up incorrectly in non-threaded view but I think that was a reply in part to me.  It seems I'd be OK to apply for the tax relief on the £6 a month as I'm similar to the Northern example, and without any contribution from the employer.

Jeremy535897

Bossworld said:

Jeremy535897 said:

p00hsticks said:

Bossworld said:

My permanent place of work in my new contract is the head office, but I'll be permitted to work from home 90% of the time.  I won't be getting a homeworking allowance in the new place.  Can I apply for this tax relief once I start the new role?

'Permitted' or 'instructed' ?

You are only supposed to claim the tax relief if your employment contrat says that you have to work from home, not if you choose to.

https://www.gov.uk/tax-relief-for-employees/working-at-home

Reasonable reimbursements (up to £6 a week being automatically regarded without evidence as reasonable) by the employer for homeworking arrangements are exempted by section 316A ITEPA 2003, which provides:

"316A Homeworker’s additional household expenses

(1)This section applies where an employer makes a payment to an employee in respect of reasonable additional household expenses which the employee incurs in carrying out duties of the employment at home under homeworking arrangements.

(2)No liability to income tax arises in respect of the payment.

(3)In this section, in relation to an employee—

• “homeworking arrangements” means arrangements between the employee and the employer under which the employee regularly performs some or all of the duties of the employment at home; and

• “household expenses” means expenses connected with the day to day running of the employee’s home."

For a claim by an employee, the stricter test in section 336 ITEPA 2003 applies, and the "necessarily" test means the employer must require it, and for a good reason (usually because the work can only be done from the employee's home, or the employer is based an unreasonable distance from the employee's home to commute to):

"336 Deductions for expenses: the general rule

(1)The general rule is that a deduction from earnings is allowed for an amount if—

(a)the employee is obliged to incur and pay it as holder of the employment, and

(b)the amount is incurred wholly, exclusively and necessarily in the performance of the duties of the employment.

(2)The following provisions of this Chapter contain additional rules allowing deductions for particular kinds of expenses and rules preventing particular kinds of deductions.

(3)No deduction is allowed under this section for an amount that is deductible under sections 337 to 342 (travel expenses)."

EIM 32830 explains in more detail:

"Other expenses: home: household expenses: relation between deduction for employee’s expenses and exempt homeworking payments: examples

Sections 316A and 336 ITEPA 2003

Example 1

An employer introduces a homeworking policy under which employees who wish to work from home may do so. The employer makes a payment of £6 per week towards the additional household expenses of those employees who decide to work from home. The £6 per week is exempt from tax under section 316A ITEPA 2003 (see EIM01472 onwards). However, employees who can show that working from home costs them more than £6 per week are not able to obtain a deduction for the excess under section 336 because they are working at home by choice. The conditions for relief under section 336 are more restrictive than the conditions for exempt payments under section 316A.

Example 2

The North of England representative of a company whose only offices are in London is entitled to a deduction under section 336 ITEPA 2003 for the expenses of working at home. He produces evidence that his additional household expenses, allowable under section 336, amount to £6 per week. However, his employer makes a contribution of £5 per week towards those expenses. That contribution is exempt from tax under section 316A. The amount the employee is able to deduct under section 336 is therefore £1 per week, being the difference between his allowable, additional expenditure of £6 per week and his employer’s reimbursement of £5 per week."

There isn't anything that says that a recommendation by government to work from home if possible supersedes the above requirements.

I apologise as I'm not sure if I'm getting the site set up incorrectly in non-threaded view but I think that was a reply in part to me.  It seems I'd be OK to apply for the tax relief on the £6 a month as I'm similar to the Northern example, and without any contribution from the employer.

So long as your employer requires it (see section 336 quoted above). As you quoted, you may have difficulties with 3 in the following:

"Which employees are eligible?

In order to claim tax relief, the employee must show that their home is a workplace. HMRC will accept that a home is a workplace where:

1. The employee performs substantive duties at home. Substantive duties are the tasks that employees must carry out which form all or part of the central duties of their employment. 
2. The duties require the use of appropriate facilities and such facilities are not available to the employee on the employer’s premises. (Or the employee lives so far away from the premises it is unreasonable to expect them to travel there on a daily basis.)
3. At no time before or after the employment contract is drawn up is the employee able to choose between working at the employer’s premises or elsewhere."

Bossworld

Jeremy535897 said:

So long as your employer requires it (see section 336 quoted above). As you quoted, you may have difficulties with 3 in the following:

"Which employees are eligible?

In order to claim tax relief, the employee must show that their home is a workplace. HMRC will accept that a home is a workplace where:

1. The employee performs substantive duties at home. Substantive duties are the tasks that employees must carry out which form all or part of the central duties of their employment. 
2. The duties require the use of appropriate facilities and such facilities are not available to the employee on the employer’s premises. (Or the employee lives so far away from the premises it is unreasonable to expect them to travel there on a daily basis.)
3. At no time before or after the employment contract is drawn up is the employee able to choose between working at the employer’s premises or elsewhere."

------
I might try and contact HMRC for clarification but yeah it's looking unlikely isn't it.  It's not a full choice per-se post-lockdown but I think I'm their first ever truly remote employee.