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Claiming tax relief if you work from home

Published on Oct 30, 2008 |

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Small business owners are being urged to claim all the tax relief they are entitled to from HMRC. This will naturally include the growing number of freelancers and contractors who use their home as their main workplace.

Head of taxation at the ACCA, Chas Roy-Chowdhury, said:

"If you have to work from home, HMRC has a website that explains the benefits which are payable for home workers - tax relief is available for the extra household expenses that have to be paid if working from home."

Typical expenses include:

- The extra cost of gas and electricity to heat and light your work area.

- Business telephone calls.

- Use of a car - a percentage of tax relief is available based upon how much business use is incurred. In addition, a percentage of the 20% capital allowances may also available on your vehicle based upon the percentage of business use.

- You may also be entitled to a deduction for items used for your business - either a capital allowance deduction for computer equipment, or a straight forward deduction for some items such as stationery and paper.

Roy-Chowdhury added: "HMRC makes it very clear that you will not be able to receive tax relief on domestic expenses that are being paid, such as mortgage payments. And no relief is available when it comes to using services such as phones and internet which are also used for personal usage. There has to be a clear demarcation.

"It is important to claim all tax reliefs if you are running a business from your home, or if you are working as an employee at home; however small the relief payments may be, it is still important to claim them. That old adage of looking after the pennies and the pounds will look after themselves, is certainly relevant in this case."