Working from home tax checklist

With gridlock predicted for the capital during the London 2012 Olympics, the pressure is on more people to work flexibly from home. Jennifer Adams presents a checklist of the main tax issues that may arise.

Whether as a result of special circumstances such as bad weather or the Olympic games, working from home regularly rears its head in AccountingWEB’s Any Answers section, particularly concerning claims for directors who use their home as an office.

Four years ago Nichola Ross-Martin wrote a series of articles on this topic that still stand the test of time; not much has changed apart from the HMRC increasing the standard weekly scale rate to £4.

The full article available to logged-in AccountingWEB.co.uk members provides a checklist of points to consider, including:

  • General employment expenses - conditions and what is allowed
  • Voluntary arrangements (eg Olympics) - what can be claimed under s316 ITEPA 2003
  • Directors’ licence agreement
  • Any Answers queries
  • How to calculate claim

 

Further reading

Jennifer Adams FCIS TEP ATT is a freelance writer and author specialising in tax and company secretarial issues, and can be contacted at Abacus Business Solutions.

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Comments

London Empty

frauke | | Permalink

Its amazing.  I had to go to Stratford on Friday afternoon to attend the opening a festival going on for 17 days (less than a mile from the Olympic village), and apart from the closure of the Maryland Station, travelling was easy and not at all crowded!  The roads were so empty, that I decided to drive up from Hampshire on Saturday and again on Sunday (Sunday the London was like a ghost town).  I going to drive up again this afternoon and attend for another day. Its wonderful. I normally would never consider driving in London, but no-one seems to be travelling in London at the moment. I have never seen the roads this empty.

 

The Minion's picture

I too drove to London on Friday    1 thanks

The Minion | | Permalink

but spent the best part of seven hours on the motorways (a significant prt of which was on the M25).

I woudl hazard a guess that London is so quiet because Seb Coe is coralling all the motorists on the M25 until he finds somewhere to put them.

Telephone/Broadband packages

Primeman | | Permalink

I am confused as to whether an Employee that has a bundled Telephone and Broadband package provided primarily for work purposes needs to put an allowance on the P11D for private phone usage.

Does anyone have any experience of these

Putting on the greatest loss making show on earth    2 thanks

philfromleeds | | Permalink

 

I feel that Danny Boyle did us proud. He and the athletes and also the lottery players are the hero's. We have now got the facilities to do the European Championships and the Commonwealth Games and even the Olympics again but I wish we never got involved in the first place.

Steve-EBL's picture

Why wish?

Steve-EBL | | Permalink

philfromleeds wrote:

 

I feel that Danny Boyle did us proud. He and the athletes and also the lottery players are the hero's. We have now got the facilities to do the European Championships and the Commonwealth Games and even the Olympics again but I wish we never got involved in the first place.

 

Why?????

John Stokdyk's picture

@Primeman - hope this helps

John Stokdyk | | Permalink

I don't have direct experience of what to do, but think that Nichola Ross Martin may have covered it in her previous guide on Computer and broadband services. The only difference that I'm aware of since then is that HMRC has relented in its classification of mobile telephones so that they can include modern smartphones.

However, I think the conditions and procedures would follow the advice provided by Jennifer Adams above, so that there could be problems unless the internet package was put in place specifically to carry out the responsibilities of the job. If it was already there, they might struggle to make the claim.

 

Maybe because...    1 thanks

tomtrainer | | Permalink

Steve-EBL wrote:

philfromleeds wrote:

 

I feel that Danny Boyle did us proud. He and the athletes and also the lottery players are the hero's. We have now got the facilities to do the European Championships and the Commonwealth Games and even the Olympics again but I wish we never got involved in the first place.

 

Why?????

I'm guessing, because of the cost to us UK subjects, but may also be because of the decrease in freedom we re suffering (eg police attack on cyclists), the increased militarisation of our streets, the rampant corporatism and the effect on our children's health of the additional McDonalds and Coca Cola advertising. Of course I may be wrong, and there may be other reasons.

Danny Boyle?

leon0001 | | Permalink

I thought it was Frankie Boyle.

Steve-EBL's picture

One foot in the grave?

Steve-EBL | | Permalink

Well I think the cost has been easily managed via gamblers and those that wish to attend in person. A burger has essential vitamins and minerals, it's the French fries you need to limit. perhaps share them instead of one each, and McDonald's now has a new fizzy drink with no added stuff and classes as 1 of your 5 a day. Perhaps the BBC should put re-runs of one foot in the grave on for those not that keen.

Business calls from home.

Sharland | | Permalink

I prepare tax returns for clients. I can choose how I charge them. I may charge a fixed fee; I may charge on a time basis; I could charge on a cost-plus basis or more probably on what I think they will pay without complaining about the fee. Whichever way I calculate my charges, it is still a charge for the same service.

 

When I make a business call from home, I am using the facility offered by my telephone provider. When I make the call, I am using the whole of the facility provided, wholly and exclusively for business. If, during the call, I discuss non-business matters, there may be a case for disallowing the expense on the grounds that it is not wholly for business. Any non-business conversation will invariably be incidental and thus disregarded. The call will always be “necessary” otherwise I would not be making the call. The cost charged by the company for making the call will be 100% allowable, regardless of how they choose to divide the fee between fixed and variable cost. In these days of total automation of telephone systems, any division of the cost is spurious.

 

 In my view, the whole of the telephone cost should be divided as between business calls and non-business calls. The business proportion is allowable whether claimed under s336 or s316 ITEPA 2003. For HMRC to continue to maintain that the so-called line rental is not allowable is wrong. It is not sustainable either in the purpose or the letter of the law.

Business phone

leon0001 | | Permalink

Further to Sharland's comments, the phone is also used to receive calls. If there is no significant personal use within home working business hours, why not apportion on the basis of business/non business hours. If an employer requires the employee to provide his number for work at home, it must be necessary for the purpose of the duties of the employment. This is especially relevant where calls are bundled with line rental.

Rate to claim

tim hervey | | Permalink

EIM32815 also explains that the £4 per week from 6 April 2012 is for employees paid weekly and that £18 per month should be claimed for employees paid monthly (claim for each week/month that the employee isrequired to work at home). Don't recall there were weekly/monthly rates prior to 6 April 2012.

Rental/license agreement template.

fpdbookkeeping | | Permalink

Quite an old article, but relevant to my current question. Does any one have a template of a rental/license agreement contract referred to above, that I could look at?

Thank you.