As a company Director or employee, you can claim tax relief for additional household costs if you must work at home regularly, either for all or part of the week.
You can either claim tax relief on a:
An employee can claim tax relief for working from home if:
However, an employee cannot claim tax relief if:
HMRC allows limited companies to pay their directors or owners nominal expenses to cover general costs for working from home.
Under a flat-rate basis, employees and director expenses are claimable up to £26 per month, or £6 a week. You don’t need any approval or authorisation to make these nominal payments. You also don’t need to keep any specific evidence or records of the costs incurred by working from home.
You can usually claim a higher sum if your working from home actual costs are higher than £6 per week.
In that case, you must establish how much extra you are spending on household bills due to working from home by:
You must prove to HMRC – you made a ‘fair and reasonable’ calculation when making a claim. You will need evidence such as receipts, bills, or contracts to show the exact amount of extra costs you have incurred above the weekly amount.
You will get tax relief depending on the rate you pay tax. For example, if you pay the 20% Basic Rate and claim tax relief of £6 a week, you will get £1.20 per week in tax relief (20% of £6). A higher-rate taxpayer would receive £2.40 a week (40% of £6 a week).
When claiming, you can backdate claims for up to four years and will receive a lump sum payment if HMRC approves
You cannot claim tax relief for the whole bill – only claim what relates to your work. You may be able to claim tax relief for:
Unlike self-employed individuals, you cannot claim the cost of rent or mortgage interest via your workplace from home allowance
Once your application has been approved, your tax code will be adjusted for the tax year, and you will receive the tax relief directly through your salary.