work from home and employed

bonnerbob

hi guys.... can anybody help out there....

my girlfriend works for a big company as a account manager. She works from home and rarely goes to the office in london. She has no choice of working from home and the london office is too far away.

My question is how much of her bills for water,electricity, gas and council tax can she claim tax relief on? how easy is it to claim....and can it be backdated??

Pennywise

HMRC allow £2 per week as a deduction from her income if she has to work from home. So if she is paying tax at 40%, her tax bill is reduced by 80p per week. I think that HMRC would argue that it is the employers' responsibility to cover their employees' additional costs of working from home. If she can "prove" that her additionals costs are more than £2 per week, i.e. the extra she spends on heating & lighting, then she can claim a higher amount as long as the she can prove that she is required to work from home, i.e. part of her employment contract. Fixed costs, like rates, insurance, mortgage/rent, are not claimable at all for an employee as they aren't "extra" costs - she'd incur them anyway.

bonnerbob

cheers... can the claim be back dated. eg can she claim for the last 5 years?

fengirl_2

She needs to claim the correct proportion of her heat and light bills relating to the room she uses. If she has a 3 beds and 2 receps, she claims one fifth of these bills (you dont count the loo and kitchen). If she has a cleaner, then again she claims one fifth of that cost.
She will need to produce her contract to HMRC to show she is required to work from home and can claim up to 6 years back, if applicable. A simple letter will suffice.

bonnerbob

hey thanks fengirl!

So am i right in thinking we calculate this by finding a quarter (she has one reception and 3 bedrooms) of the TAX charged on all the houshold bills over the last 6 years. eg Electricity, water, gas. Then ask for the sum back in a letter to the HMRC?

fengirl_2

No, you need to add up all the heat and light bills (including VAT) for each individual year and claim one quarter of those. Its nothing to do with VAT - she is applying for income tax relief on the additional expense incurred in working from home.

bonnerbob

Thanks for that.... sorry for been slow but lets do a example: a quarter of the for-mentioned bills would for arguments sake come to £250 for a year. Would she get £250 back for that year or just a portion of that?

Pennywise

Apportionment of household expenditure on a room-by-room basis is sadly not an acceptable way of calculating the allowable use of home costs.

The HMRC website gives clear examples of what is and isn't allowable for employees:-

This link from HMRC website gives examples of whether any "use of home" expenses are allowable at all in the given circumstances:-
http://www.hmrc.gov.uk/manuals/eimanual/EIM32790.htm

This link from HMRC website gives the way in which the amount allowable is worked out and shows how the £2 per week compares with the "additional" costs of using your home for work.
http://www.hmrc.gov.uk/manuals/eimanual/EIM32815.htm

The rules are different for those in business (i.e. self employed) which are more flexible, but the above is the correct way of claiming use of home for an employee and is basically restricted to £2 per week unless you can prove that working from home is costing you more than this.