It’s pretty uncertain out there. Businesses are preparing for postponements, cancellations and potentially staff illness. If you are working from home because of coronavirus, one thing is certain; tax deductions are available to help you with costs. Here’s what’s on offer whether you work for yourself or someone else:
1. If you’re self employed
When you work for yourself, you complete a self assessment tax return each year. Self assessment provides the option to claim allowable expenses. These are expenses that are deducted from your overall revenue before your income tax is calculated.
Here’s an example: if you make £40,000 in sales, but you have £10,000 in allowable expenses, HMRC will only calculate the tax you pay based on £30,000 of profit. Brilliant!
Here are the types of allowable ‘work from home’ expenses;
- Council Tax
- Mortgage interest or rent
- Internet and telephone use
You can calculate your work from home expenses in two ways. 1. You claim the proportion of the costs in line with the space your business uses. So if you have a four-room flat and only use one room for your business, you can claim one quarter of your costs. 2. You can use the hours you work from home each month. So, if you work from home 25-50 hours, you can claim £10 per month, 51 to 100 hours, you can claim £18 per month, and if you work 101 or more you can claim £26 per month.
Choose the method that’s best for you by visiting HMRC or talking to your accountant!
2. If you work for a business (especially a small one!)
The first question to ask is whether you self-elected to work from home. The second is whether your employer has already reimbursed you. If you answer ‘yes’ to either of these questions, you’re out of luck when it comes to tax claims. However, if your employer required you to work from home, and hasn’t reimbursed you, you may be able to claim back some tax.
Here are some of the things you can claim for:
If you’re not at work, and need to buy small tools, these may be claimable!
- Vehicles you use for work
If you are advised to use private transport to protect yourself, you may be able to claim costs for mileage and fuel.
- Travel and overnight expenses
If you’re stuck in an odd location due to the virus and your employer is not compensating you for the cost, you may be able to claim money you spent on food or overnight stays.
- Working from home
You may be able to claim heating and lighting the room you work in, or the cost of business telephone calls.
- Buying equipment
Did you buy a second monitor or a chair to work from at home? If so, you may be able to claim tax relief on the cost.
Check what you can claim using HMRC’s calculator.
Remember! You must keep receipts for all the expenses you incur in order to claim them. The best way to keep track of your working from home costs is to use easy accounting software like Clear Books. Take out a free 30 day Clear Books trial and keep track of your receipts today.