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Your questions answered around working from home

The Coronavirus Pandemic and ensuing lockdown has forced many people to work from home, with some employers even having decided to get rid of their offices completely and continue operating with a remote workforce.

Working from home has triggered some frequently asked questions by employers and employees alike, so in this blog we’ll provide answers around some of the most frequently asked questions when it comes to claiming expenses and office equipment.

I run my own limited company and now work from home due to the pandemic – what can I claim as business expenses?

If you have decided to close your office due to the pandemic you may be asking the question what can I claim as tax deductible expenses from my limited company?

You may have been used to purchasing office supplies such as tea, coffee, water, fruit and cleaning supplies for the office as well as light, heat and broadband costs being taken care of by the company.

Many of these items will now be part of your home shopping bill and so, unless you are specifically buying beverages for a client meeting, the office supplies will no longer be business expenses and cannot be reclaimed from the company.

In terms of using your home office/back bedroom/kitchen table/shed HMRC allows a non-taxable, flat rate of £6 per week for expenses like electricity and heating, including your home broadband.  You can also make a claim based on proportional usage that can result in higher claims, but the calculations are more complex, so please do ask us for help if you think it may be worth doing.

If you need to purchase equipment to enable you to work from home the company can pay for the actual costs of the purchase, as long as there is no significant private use.

What if I have employees who are also working from their homes?

Likewise the company can reimburse an employee for the purchase of office equipment required to enable them to work from home. 

If you do not reimburse your employee they can claim tax relief for these purchases on their tax return.

If your employee already pays for broadband then no additional expenses can be claimed.  But, if a broadband connection is needed to work from home, and one was not already available, then the broadband fee can be reimbursed by the company and is not taxable. In this instance private use must be limited.

The company can reimburse its employees up to £6 per week (since 6 April 2020) to cover expenses such as light, heat and broadband.  If the claim is above this amount, then your employee will need to check with you beforehand to see if you will make these payments and keep receipts.

Returning office equipment

Equipment provided by employer

If you have supplied office equipment to an employee so they can work from home HMRC guidance states that there is no tax charge when the equipment is returned to the company, so long as there is no transfer of ownership.  If you do transfer ownership of the equipment to an employee this will become an employee benefit. 

Equipment reimbursed by employer

HMRC guidance states that where your employee has agreed to buy their own office equipment for use whilst working at home and you have reimbursed the exact expense, unless you have specified that they must transfer ownership to you, the equipment is owned by your employee.  There is no benefit charge on the reimbursement. There is also no benefit charge if you let your employee keep the equipment as it is something that they already own.

Making a claim is easy, tell your employees to go to GOV.UK and search ‘claim tax relief for your job expenses’.  It’s quick and secure, and those who are eligible will receive their full entitlement by an adjustment to their tax code.

If you have any further questions around the tax implications of working from home, please call your local Hartley Fowler office, and we will be happy to help.