To start off, please note that we’re not finance accountants and the following advice should be double checked before being carried out.
You want your business to run as cost-effectively as possible, so why should this change when you and your staff are working from home?
There are all kinds of business purchases that can be claimed against, providing they tick the following boxes:
- The expenses need to be wholly applicable to business purposes, e.g. a new desk and chair for your home office are eligible but a top-of-the-line entertainment system won’t be (unless you have an exceptionally good reason, in which case we’re very jealous).
- You’ll need some kind of proof of purchase, such as an invoice or receipt (digital copies are fine as long as they provide full information).
- Wherever possible, pay for business expenses using the company bank account. There’s the option to pay through a personal account and claim back later but it requires a lot more admin.
What can I claim for whilst working from home?
Let’s start off with the most popular example of a remote working expense that’s often forgotten about by business owners and staff.
Use of a home office is in itself an expense that you can usually claim against.
It won’t be much but it can make a positive difference to your cash flow.
After all, the most successful businesses are those that appreciate the cumulative value of small savings.
There’s then a wide variety of additional expenses that can be claimed against, helping to lower the company’s next tax bill. These include:
- Phone and broadband (it might be worth using a separate mobile phone for your business, as that way the full bill can be claimed for).
- Fees, interest and charges to your business bank account.
- Childcare expenses – limited companies can receive monthly childcare vouchers for their staff.
- Professional subscriptions, such as any clubs, societies, magazines, journals, websites and other communities related to your business.
- Technology, hardware and software, ranging from new devices and hosted desktops, to Office 365 and Dropbox.
- Postage and anything related to it, including envelopes, stamps and franking.
- Professional development is usually a valid expense, such as any training required by you and your staff require in order to advance the business.
- Equipment and furniture purchases covers anything you need for your company to function, so make sure to keep the receipts for things like office chairs, stationery, printer toner, even paperclips and pencils.
- If you pay yourself a salary as an employee of the business, this can be claimed as an expense alongside your National Insurance contributions.
- You can also claim against pensions through a registered provider, allowing 100% tax relief up to the £40,000 threshold (at which point you’ll begin to pay tax on contributions).
- Health checks and eye tests for you and your employees can be claimed for, as long as you can prove that they’re in the best interests of the company.
- Travelling to meetings, temporary workplaces (not your main office) and industry events all qualify for a claim against petrol, parking, road tolls and congestion charges, as well as any vehicle insurance and repairs associated with this activity.
Making the most of tax relief
Tax relief for setting up and running a home office is nothing new, yet it’s never been more relevant.
It’s very rare that someone can adapt to home working without needing to buy something, such as furniture, hardware, hosted desktops, office supplies, storage units and subscriptions to software such as Zoom and Monday.com.
No matter what the purchase is and how much or little it comes to, always make sure to keep the receipt and log it as an expense.
In the event that the expense can’t be claimed against (which is very rare), your accountant will let you know before your accounts are passed on to HMRC.
In other words, there’s no risk of getting in trouble as long you do everything by the book and explain why the expense is relevant to the business or your role within it.
Exemptions from the rule
To reiterate (because you can never be too careful when it comes to tax), the only things that can’t be claimed against when using a home office are purchases that are entirely or partly of a personal nature.
- Rent and mortgage payments
- Landline and broadband, as these are for personal use too
- Clothing, unless it’s a branded uniform that will look more professional during video meetings
How to claim tax relief whilst working from home
If you’re self-employed or the business owner, either include these costs in your next self-assessment tax return, send the information to your accountant or log them into any cloud accounting apps you use (e.g. Xero, Receipt Bank).
Employees can claim tax relief whilst working from home too – they just need to fill in a P87 form through the GOV.uk website.
As long as a member of staff’s expenses are less than £2,500 for the tax year, they should be able to claim for everything from ergonomic chairs to A4 writing pads.
Hosted desktops are tax efficient
Thanks to hosted desktops from GoCloud facilitating home working, they can be claimed as a tax expense. If you’re ready to make the switch, get in touch on 01482 751133 or email firstname.lastname@example.org.