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rajibraj 11 January 2024

Understanding Tax Allowances for Working from Home

The COVID-19 pandemic brought about a significant shift in work patterns, leading many individuals to work remotely from their homes. The HM Revenue and Customs (HMRC) offers tax relief to employees and the self-employed who work from home. Here's what you need to know about tax allowances for home working:

What Expenses Can You Claim?

Working Space: You can claim for expenses related to using a part of your home as a dedicated workspace for work purposes.

Utility Bills: Costs associated with increased usage of utilities like electricity, gas, water, and heating due to working from home.

Telephone and Internet: Proportionate costs for business calls or broadband used for work-related tasks.

Office Supplies: Expenses on stationery, printer ink, and other necessary office supplies used for work.

How to Claim Tax Relief?

Flat Rate Allowance: HMRC introduced a simplified flat rate allowance of £6 per week (£26 per month) for home working expenses. This doesn't require providing bills or receipts.

Actual Costs: Alternatively, you can claim the actual costs incurred, but you'll need to calculate the proportion of costs directly related to working from home.

Remember to maintain accurate records and only claim legitimate expenses related to working from home to avoid any issues with HMRC. Seeking advice from a tax professional can provide further guidance on maximizing available tax relief for home working.

Eligibility Criteria:

Exclusive Use: The workspace must be exclusively used for work purposes and not for personal activities.

Regular Use: It should be used regularly for work, even if you split your time between home and the office.

How to Apply:

Employees: Apply through your self-assessment tax return or directly to HMRC using form P87.

Self-Employed: Include these expenses when calculating your self-assessment tax return.

What You Can't Claim:

General Household Costs: Expenses unrelated to working from home, such as rent or mortgage interest, council tax, or home insurance.

Non-Business Calls: Personal phone calls or internet usage are not claimable.

Future Changes:

Given the shift in work patterns, HMRC might reassess and potentially introduce new schemes or revised allowances for home workers in the future.

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Conclusion:

Tax allowances for working from home can provide valuable relief for expenses incurred due to remote work. Understanding what expenses are claimable, meeting eligibility criteria, and applying for tax relief can help individuals benefit from available allowances and reduce their tax liability.

This comprehensive guide outlines tax allowances for individuals working from home, explaining eligible expenses, application procedures, and eligibility criteria. It emphasizes the importance of understanding what can be claimed, maintaining accurate records, and seeking professional advice to make the most of available tax relief.

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