Use of home for Director

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Ltd Company sole director working from home (has full time job)  Last year I allowed the £312  but for the last 4 months of this year he has rented office space (hot desk)  App developer

I can't decide whether to still allow the £312 or pro rata it up to renting the office space.   Thoughts?

Replies (18)

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By Crouchy
31st Oct 2023 10:49

Surely you need to ask the director if they still do any work from home and then make a claim on that basis?

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By tractorboy
31st Oct 2023 11:44

From April 2022 the rules have changed. You can only claim the working from home deduction if you are required to work from home and have not chosen to work from home. I suspect we will see a number challenges by HMRC on claims made for 2022/23 - admittedly small amounts of tax at stake but an easy win for HMRC if you are unaware of this change.

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Replying to tractorboy:
Stepurhan
By stepurhan
31st Oct 2023 12:41

Does that not apply to ordinary employees, not company directors? After all, a director (with their director hat on) could "require" themselves to work at home.

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Replying to tractorboy:
Stepurhan
By stepurhan
31st Oct 2023 12:41

Does that not apply to ordinary employees, not company directors? After all, a director (with their director hat on) could "require" themselves to work at home.

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Replying to tractorboy:
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By legerman
31st Oct 2023 13:53

tractorboy wrote:

From April 2022 the rules have changed. You can only claim the working from home deduction if you are required to work from home and have not chosen to work from home. I suspect we will see a number challenges by HMRC on claims made for 2022/23 - admittedly small amounts of tax at stake but an easy win for HMRC if you are unaware of this change.

It's this rule change which made me hesitate, but as a Director it is down to them if they are required to work from home. (Ltd Co is registered at home address) Renting office space muddied the waters a bit for me

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Replying to legerman:
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By JB101
31st Oct 2023 14:14

It's very easy to work from home despite having another workspace. I don't see why this changes the "requirement" to work from home.
I have two offices and am also required to work from home. I check emails etc outside office hours and reply from home, etc.

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Replying to JB101:
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By Bobbo
31st Oct 2023 14:55

Checking emails outside office hours and replying to them from home does not mean you are required to work from home.

You could simply stay at the office later / arrive earlier and read and reply to those emails from the office.

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Replying to Bobbo:
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By JB101
31st Oct 2023 15:50

"You could simply stay at the office later / arrive earlier"
You clearly haven't met my wife!

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Replying to legerman:
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By Tax Dragon
31st Oct 2023 14:43

legerman wrote:

it is down to them if they are required to

Superb statement of the problem.

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Replying to Tax Dragon:
Stepurhan
By stepurhan
31st Oct 2023 15:18

I think the rule change is more aimed at employees who choose, and are allowed by their employers to, work from home. They are no longer eligible for the use of house allowance.

Directors can require themselves to work from home by acting as an officer of the company instructing themselves as employee. No different from them agreeing a salary with themselves really. One of the bizarre results of one-man companies.

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Replying to stepurhan:
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By Tax Dragon
31st Oct 2023 18:24

Do you mean that as directors they can require themselves as employees to do this or that? That may be so, but does that argument potentially open up the NMW can of worms that they'd rather keep shut?

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Replying to stepurhan:
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By Mr_awol
02nd Nov 2023 15:02

stepurhan wrote:

I think the rule change is more aimed at employees who choose, and are allowed by their employers to, work from home. They are no longer eligible for the use of house allowance.

Directors can require themselves to work from home by acting as an officer of the company instructing themselves as employee. No different from them agreeing a salary with themselves really. One of the bizarre results of one-man companies.

I think the 'rule change' is irrelevant for a director (if managed properly). Certainly i believe the 'choice' element is.

Since 2003 an employer (including a director) has been able to pay an employee (including a director) an allowance tax-free in respect of 'homeworking arrangements' whereby an employee is regularly working from home (HMRC guidance suggesting that regularly means frequent, or following a pattern - so not just taking the odd bit home or checking emails whilst watching Love Island or MAFS in the evening).

On the other hand, an employee cannot claim tax relief for costs of homeworking (where no reimbursement is made) if the employee is able to choose between working at the employer's premises, or elsewhere.

In short - i think if the employee works voluntarily from home the allowance can still be paid tax free under S316A, but if not paid then the employee can only claim under S336 if they are 'forced' to WFH. Maybe one of the tax-types who are cleverer than me on these matters can/will confirm* the distinction i have drawn.

* or correct me in a scathing and entertaining manner of course. At the end of the day the amounts involved are so small that i doubt it's really all that important either way and I'd rather get the little things wrong than the big things (and hopefully not both/all things of course).

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By gillybean04
31st Oct 2023 17:32

Who entered the contract and what is the contract for?

Why did they enter the agreement? Why did they make the change from working at home to hotdesking at other premises? Is it just a licence to use the space that is being provided or something more?

It will probably be helpful to consider which section of the legislation the claim would be made under and the criteria that must be satisfied before a deduction can be allowed under that section.

Gut instinct is no, but always important to let the facts lead you to conclusion rather than assumptions.

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DougScott
By Dougscott
31st Oct 2023 22:52

Well all my small limited companies clients pay rent if they use space in the directors home, against which the director claims an appropriate proportion of their house costs. Not rocket science.

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By C Graham
02nd Nov 2023 10:00

that rent is just a business cost then - expense it. The flat rate relief would no longer apply and is superceded by the rented desk cost anyway.

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Replying to C Graham:
By JCresswellTax
02nd Nov 2023 10:06

Whats VAT got to do with this? Confused!

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Replying to JCresswellTax:
By SteveHa
02nd Nov 2023 11:28

Reference to "flat rate relief" is a reference to £6pw WFH deduction, not to the FRS for VAT.

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By Calculatorboy
02nd Nov 2023 23:13

These are such piffling insignificant amounts, just take a view

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