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Last updated: 15 Jun 2023
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Working from home – tax relief for home-office expenses

The rules around claiming tax relief for home-working expenses are now being enforced by HMRC more strictly than they were during the 2020-21 and 2021-22 tax years (COVID-19 pandemic). In this article we share the considerations for employees and the self-employed. 
If you're employed

If you're employed

If you’ve not claimed tax relief for home working expenses for the 2020/21 and 2021/22 tax years (where the home-working rules were substantially relaxed), it’s not too late as claims can be backdated for four tax years. 

However, for the 2022/23 tax year and going forwards, it’s not possible to claim home-working expenses where you have chosen to work from home. Instead, relief is only available where you can demonstrate that your duties cannot be performed at your employer’s office/premises or that your role requires you to live far enough away from your employer’s office/premises that it would be unreasonable for you to travel there daily. This means the majority of employees who claimed home-working tax relief in 2020/21 and 2021/22 will no longer qualify, as only limited circumstances will now satisfy HMRC. 

If you qualify for home-working tax relief, you can claim:

  • A flat rate of £6 a week (£26 a month), without requiring any evidence of any home-working expenses, or 
  • The amount of the extra household costs incurred as a result of working at home - records should be retained to evidence the amount claimed. 

If you qualify for home-working tax relief and your employer reimburses you expenses under either of the above methods, the payment should not be subject to tax and National Insurance.  

About the author

Akin Coker

+44 (0)20 7556 1332
cokera@buzzacott.co.uk
LinkedIn

If you're employed

If you’ve not claimed tax relief for home working expenses for the 2020/21 and 2021/22 tax years (where the home-working rules were substantially relaxed), it’s not too late as claims can be backdated for four tax years. 

However, for the 2022/23 tax year and going forwards, it’s not possible to claim home-working expenses where you have chosen to work from home. Instead, relief is only available where you can demonstrate that your duties cannot be performed at your employer’s office/premises or that your role requires you to live far enough away from your employer’s office/premises that it would be unreasonable for you to travel there daily. This means the majority of employees who claimed home-working tax relief in 2020/21 and 2021/22 will no longer qualify, as only limited circumstances will now satisfy HMRC. 

If you qualify for home-working tax relief, you can claim:

  • A flat rate of £6 a week (£26 a month), without requiring any evidence of any home-working expenses, or 
  • The amount of the extra household costs incurred as a result of working at home - records should be retained to evidence the amount claimed. 

If you qualify for home-working tax relief and your employer reimburses you expenses under either of the above methods, the payment should not be subject to tax and National Insurance.  

If you’re self-employed

If you’re self-employed

When working from home, you can claim tax relief for business expenses as long as they’re ‘wholly and exclusively for the purpose of the business’. There are three ways of claiming relief:

1. Use HMRCs flat rate deduction based on the number of hours worked per month. 

There is no need to provide any records. The relief is as follows:

  • 25 -50 hours a month - £10
  • 51 -100 hours a month - £18
  • 101 hours or more a month - £26

HMRC’s guidance states that telephone and broadband costs do not relate to the home itself and can therefore be claimed (to the extent they relate to business use) in addition to the flat rate expenses.  

2. Claim relief for the higher amount, if your actual costs of working from home exceed HMRC’s flat rates and you can demonstrate that these have been calculated on a ‘fair and reasonable’ basis.

You can claim a proportion of the following costs (not all of which are available to employees):

  • Mortgage interest (not capital repayments) or rent
  • Council tax
  • Light and heat
  • Telephone line rental/broadband costs
  • Household insurance
  • Household cleaning costs
  • Household repairs 

How do you calculate the expenses?

You need to calculate a proportion of household expenses based on the number of rooms in which you work, compared to the number of rooms in the house. You must then calculate on a fair and reasonable basis, the business use of that particular room per week. This can be done in a number of ways and will depend on your personal circumstances; a common method used is to calculate the business use of the fixed costs based on total hours in the week, and variable costs based on the total use of the room.

As an example, to work out the annual allowable cost of working in one room out of four, seven hours a day, five days of the week (35 hours), with another two hours a day, seven days of the week for personal use (14 hours):

Total hours used in the week = 49 hours (35 hours + 14 hours) *

Total hours available in the week = 168 hours (24 hours x 7 days) **

a) Multiply variable expenses by 1/4 to calculate the cost per room 

b) Multiply result in a) by 35/49 for the variable costs (business hours over total hours used) *

c) Multiply fixed expenses by 1/4 to calculate the cost per room 

d) Then multiply result in c) by 35/168 for the fixed costs (business hours over total hours available in the week) **

e) Add the two resulting figures in b) and d) together to calculate the total deductible expenses

3. If your total business expenses are less than £1,000

If your total business expenses, including your home-working expenses, are less than £1,000, it will be more beneficial to claim for the trading allowance of £1,000 to be offset against your business income. 

Where the trading allowance is claimed, no further tax relief is available in that year for any business expenses.  

How to claim
How to claim 

Depending on the circumstances, the claim can be made online, on your Self-Assessment tax return, or if you have your National Insurance number and a bit of patience, you can call HMRC. 

Get in touch
Get in touch

For professional tax advice tailored to your unique circumstances, please fill out the form below and one of our experts will be in touch to discuss how we can work together. 

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