It’s pretty uncertain out there. Businesses are preparing for postponements, cancellations and potentially staff illness, and of course, further lockdowns. If you are working from home because of coronavirus, one thing is certain; tax deductions are available to help you reduce your domestic costs. Here’s what’s on offer whether you’re employed or self-employed:

If you’re employed or a director of your own company

There’s now an easy way to claim tax relief! At the beginning of October, HMRC launched an online portal offering employees a new way to claim tax relief on £6 per working week. If you’ve been asked to work from home by your employer due to coronavirus, then you’re eligible to claim tax relief if you meet certain conditions.

There are two ways you can claim tax relief:

  • Claim tax relief on £6 a week to cover the additional costs of working from home. That means a tax reduction of 20% on £6 (£1.20) a week if you’re a basic rate taxpayer, or 40% (£2.40 a week) if you’re a higher rate taxpayer.
  • Claim tax relief on a portion of your additional domestic expenses due to working from home. If you believe your costs are higher than £6 a week then you may be able to claim more. Although, you’ll need to ensure you can provide evidence for this through bills, receipts and contracts etc. 

Start the process today by applying directly through HMRC

If you’re self-employed (sole trader)

When you work for yourself, you normally complete a Self-Assessment tax return each year. Self-Assessment provides the option to claim your ‘work-from-home’ expenses, which reduces your tax. 

Here’s an example: if you make £40,000 in sales, but you have £10,000 in normal expenses plus £1,000 in ‘work from home’ expenses, HMRC will only calculate the tax you pay based on £29,000 of profit. Brilliant!

Here are the types of allowable ‘work from home’ expenses you may be able to claim:

  • Heating
  • Electricity
  • Council Tax
  • Mortgage interest or rent
  • Internet and telephone use

Choose the claim option that’s best for you by visiting the HMRC website or by talking to your accountant!

Don’t have an accountant?

Get in touch with our Account Management Specialist if you wish to be referred to one of our partner accountants.

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References:

Disclaimer:
This is a guide only and not to be taken as advice. Please seek advice from a professional before taking your next step. 

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Posted by John Fouracre

John is the manager of the customer support team and endeavours to solve all issues customers may have while addressing any questions about the system. John enjoys the constantly evolving challenges that are faced at Clear Books everyday. John is currently the longest standing employee at Clear Books and has witnessed the rapid growth and development of the system since 2010. When not solving everyone's problems, John enjoys to play sports, specifically football, swimming and cycling.

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