self assessment - working from home relief - calculated amount NOT flat rate £6/wk allowance

eddster

Apologies if covered in detail elsewhere but I could not locate a relevant one if so

I am an employed 40% rate tax payer, but I do a self assessment return each year as I get and tax free allowance adjustment for my HMRC mileage/fuel rates

Since Covid I have worked exclusively from home this will likely lead to me owing tax as my mileage has dropped off a cliff. This got me thinking about the other cost I am incurring from working at home all the time.

I am aware that I can get the COVID WFH relief of £6 per week but in reality I think my cost are exceeding that.

I get no relief from my employer for working from home in terms of extra payment etc

I can see that in 2020/21 tax year my Gas/Elec energy use went up by 23% for example (since working from home  - this is kwh usage increase not cost) over the previous year

I can do a simple evidence based calculation (bills etc) of the 23% increase and therefore an associated additional cost 23% of gas/elec bill for period, would that be a valid claim and if so would it be 40% of that I would get relief on? I have not read anywhere that suggest I could submit this as a valid calculation!

I can see that I can do a calculation for my (office) at home use based on for example the size of office room as a percentage of the overall house and adjusted by working hours for the week (40/168)

I calculate this to be circa 7% of the annual house usage (30% area and 24% hours used)

What could i apply this 7% too as a PAYE employed person who also complete a self-assessment as I have seen conflicting info

 

e.g. could I apply it against some or all of these?

Energy elec/gas

Water

Council tax

Cleaning

Broadband

Phone

House insurance

Mortgage interest

Regards

Edd

  

Pennywise

As an employee you can only claim the extra (marginal) costs of working from home, so you can't claim a proportion of the fixed costs, i.e. costs that you'd have incurred had you not worked from home.  So usually it's only the variable costs, such as power, maybe water rates if you're on a meter, business phone calls (per itemised bill), but not the fixed costs like broadband, mortgage interest, council tax, phone line rental (and inclusive minutes).  Cleaning depends on whether you're incurring more costs, i.e. extra time if you have a cleaner to clean your office more often than they did before.

eddster

ok thanks Pennywise

So in my case the primary extra cost appears to be for the increased energy use which seems to be circa a 23% increase in energy use from the previous 2019/20 period which is fairly significant as my gas/energy is circa £2500 a year

would the evidenced approach therefore be for me to submit a calculation to demonstrate the difference in usage (for example a value of £575 based on 23% of total energy bill for the year of £2500) or would it be the route of saying (per my initial post calculation) 7% of the house area now used for work per year so 7% of £2500 which at £175 is evidently quite a bit less

my alternative is the option of the £6/week so £312, so the method above used would be crucial in determining which route to go   
assume my actual saving as a 40% tax payer would be 40% of the calculated value (i.e. 40% £312 OR 40% £575)

Understand I'm splitting hairs here in terms of net benefit to me,  but as a non financial person I'm just intrigued

Edd

Dazed_and_C0nfused

I think you are missing the point of Self Assessment.

You include what you believe is correct/allowable and it is upto HMRC to challenge this if they disagree.

HMRC have a year from submission of the return to investigate your return.

eddster

Dazed_and_C0nfused said:

I think you are missing the point of Self Assessment.

You include what you believe is correct/allowable and it is upto HMRC to challenge this if they disagree.

HMRC have a year from submission of the return to investigate your return.

I hear what you are saying, what's the potential impact of getting that wrong though, I seem to recall my mother once made a relatively minor error on her self assessment (related to earning on some external consultancy work she was doing) so rang HMRC and told them and got hit with a fine for submitting an inaccurate tax return...!?

Jeremy535897

This explains what you can claim:
https://www.gov.uk/tax-relief-for-employees/working-at-home

If you make a claim for working from home and you can defend its calculation, but HMRC don't agree and to settle matters you accept a compromise, you are unlikely to face a penalty, although there would be interest on unpaid tax. Your mother appears to have neglected to declare taxable income, and that has no defence when it comes to a penalty, although it may be mitigated.

sheramber

Were the extra costs exclusively for  working from home? e.g was extra heating only used in the room you were working or was the extra heating  on for the whole house?

eddster

sheramber said:

Were the extra costs exclusively for  working from home? e.g was extra heating only used in the room you were working or was the extra heating  on for the whole house?

I'm pretty frugal in that capacity as you may have guessed 😂

I'm going to go for the 40% of £6/wk though, can't be bothered.... they win 😀 

Sandtree

eddster said:

ok thanks Pennywise

So in my case the primary extra cost appears to be for the increased energy use which seems to be circa a 23% increase in energy use from the previous 2019/20 period which is fairly significant as my gas/energy is circa £2500 a year

would the evidenced approach therefore be for me to submit a calculation to demonstrate the difference in usage (for example a value of £575 based on 23% of total energy bill for the year of £2500) or would it be the route of saying (per my initial post calculation) 7% of the house area now used for work per year so 7% of £2500 which at £175 is evidently quite a bit less

my alternative is the option of the £6/week so £312, so the method above used would be crucial in determining which route to go   
assume my actual saving as a 40% tax payer would be 40% of the calculated value (i.e. 40% £312 OR 40% £575)

Understand I'm splitting hairs here in terms of net benefit to me,  but as a non financial person I'm just intrigued

Edd

You are looking at a top down approach but really look at it from bottom up...

What extra costs have you incurred as a result of working from home? Running a laptop is typically under 10p a day, running an LED light next to it is 1p a day... where is the other over £1.09 per day coming from to say the £6/week is insufficient? 

There will be some betterment in there too I imagine, normally you take sandwiches for lunch and cooked meal at home in the evening but now you are having a cooked lunch as well and so electricity/gas consumption but you could have stuck with the packed lunch and saved that cost. 

Has anyone else been at home thats normally at work/school? Running a large screen TV will use much more than a laptop and so in home entertainment may increase fuel costs when you were normally out. All of this may have been offset by the savings from not going out to restaurants, pubs, coffee shops etc but many compensated with buying more stuff or takeaways etc so things didnt offset as much.

Grumpy_chap

I was actually looking at this for a different purpose, but over 20 months (February 2020 to September 2021) my energy consumption was:

Electricity = 6,300 kWh for 20 months is about as expected.  Barely any impact from WFH.  No delta since pre-COVID.

Gas = 39,000 kWh for 20 months.  Previously around 20,000 kWh per year.  Maybe the extra 3,000 kWh per year reflects the impact of WFH.  

3,000 kWh of gas at 4 pence/kWh = £120 per year.

eddster

Sandtree said:

eddster said:

ok thanks Pennywise

So in my case the primary extra cost appears to be for the increased energy use which seems to be circa a 23% increase in energy use from the previous 2019/20 period which is fairly significant as my gas/energy is circa £2500 a year

would the evidenced approach therefore be for me to submit a calculation to demonstrate the difference in usage (for example a value of £575 based on 23% of total energy bill for the year of £2500) or would it be the route of saying (per my initial post calculation) 7% of the house area now used for work per year so 7% of £2500 which at £175 is evidently quite a bit less

my alternative is the option of the £6/week so £312, so the method above used would be crucial in determining which route to go   
assume my actual saving as a 40% tax payer would be 40% of the calculated value (i.e. 40% £312 OR 40% £575)

Understand I'm splitting hairs here in terms of net benefit to me,  but as a non financial person I'm just intrigued

Edd

You are looking at a top down approach but really look at it from bottom up...

What extra costs have you incurred as a result of working from home? Running a laptop is typically under 10p a day, running an LED light next to it is 1p a day... where is the other over £1.09 per day coming from to say the £6/week is insufficient? 

There will be some betterment in there too I imagine, normally you take sandwiches for lunch and cooked meal at home in the evening but now you are having a cooked lunch as well and so electricity/gas consumption but you could have stuck with the packed lunch and saved that cost. 

Has anyone else been at home thats normally at work/school? Running a large screen TV will use much more than a laptop and so in home entertainment may increase fuel costs when you were normally out. All of this may have been offset by the savings from not going out to restaurants, pubs, coffee shops etc but many compensated with buying more stuff or takeaways etc so things didnt offset as much.

you are absolutely right, and I know this really. I just also know I'm about to be hit with at tax invoice due to my depletion in mileage an was looking to see if it could be reduced 🙂