Claiming costs for working from home

Working from home has become the latest craze borne out of necessity, with some (like me) doing it only when I absolutely have to and others relishing the opportunity to balance their work and home life a little.

Working from home offers some tax breaks, from fairly limited and simple cost refunds to detailed calculations that lead to greater tax savings. Effective bookkeeping is essential in accurately recording and claiming these expenses.

At the beginning of the pandemic, the government announced that the weekly tax relief of £4 per week would increase to £6 per week for those who have to work from home as part of their job. This is a standard rate that can either be paid to employees tax-free or used on employees’ (or directors’) tax returns as a cost to reduce the taxable income taken from their employment with the company.

This flat rate has the additional benefit of being available for the whole year even if working from home wasn’t continuous. An unusual blanket approach will save a basic rate taxpayer £62 or someone in the additional rate band a huge £140 in tax per year.

There is a detailed method for calculating the costs of working from home, and guidance for this is shown on HMRC’s site. Things like broadband, council tax, and heating can all be claimed—although it’s important to remember that this method, although more tax advantageous, is also open to scrutiny by HMRC. It’s a balance of attitude to risk versus claiming what’s due. Accurate bookkeeping plays a crucial role in managing these calculations and ensuring compliance with tax regulations.