Working from home? Here’s what you need to know about claiming expenses

With thousands of workers forced to work from home since March 2020, setting up a desk from the kitchen table has become an attractive option for companies looking to reduce overheads and slash rents.

According to the Office for National Statistics, almost half of British workers were working away from their office or factory last June, with many companies now planning to embrace a mix of home and office working.

This sudden change in circumstances has meant many people have taken on an unanticipated amount of running costs. Electricity, telephone charges, WiFI and even tea and coffee all add up and come at the expense of the homeworker. However, if you are working from home, you may be able to claim tax relief for some of your bills.

Here, Victoria Pearson, a Partner at Perrys Chartered Accountants, explains what you can and can’t claim if you are working from home.

My office or factory is closed and I have to work from home. What expenses can I claim?

If you have to work from home, because your office or factory is closed, then you can claim tax relief, but only for the things to do with your work. These include business telephone calls or the additional cost of gas and electricity for your work area.

However, if you use things for both business and private use, such as broadband access, then you cannot claim for these.

I have decided to work from home permanently. Can I claim tax relief?

You cannot claim any tax relief if you choose to work from home. If you decide to work from home voluntarily, there may be other expenses you are entitled to.

For example, if you set up a business from home, and you operate as a sole trader or partnership, you can include your business costs in your self-assessment tax return. These include a proportion of the cost of things such as council tax, heating, lighting, phone calls and broadband.

How do I make a claim for tax relief?

If you are eligible for claiming tax relief and you normally complete a self-assessment tax return form, you can make your claim using this method. Otherwise, you can complete a P87 form online via your Government Gateway account. If you haven’t got a Government Gateway account, you can complete a postal form.

Alternatively, from April 2020 your employer can pay you up to £6 a week (£26 a month) to cover any additional costs if you have to work from home. For previous tax years, you can be paid £4 a week (£18 a month).

Do I need to keep records if I claim tax relief when having to work from home?

The good news is you will not need to keep any records to claim the working at home tax relief so long as your claim does not exceed the £6 a week entitlement from April 2020 (or £4 a week for previous tax years). However, if you believe your costs are a lot higher than this you could claim more, but you will need to provide proof of your expenditure.

What other expenses can I claim for?

Whether you’re working from home or not, you might be able to claim tax relief for other expenses. For example, if you use your own money for things that you must buy for your job and you only use these things for your work, such as:

Uniforms, work clothing and tools
Vehicles you use for work
Travel and overnight expenses
Professional fees and subscriptions
Buying other equipment
You cannot claim tax relief if your employer either gives you all the money back or provides an alternative, such as giving you a laptop but you want a different type or model.

For some claims you must keep records of what you’ve spent, such as receipts or invoices. You have four years from the end of the tax year in which you spent the money to make a claim.

Tax can be a complicated business so it is always worthwhile seeking the help of a professional, such as a qualified accountant, to help ensure your claim is correct.