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Working from Home Tax Breaks: Your Questions Answered

By: Garry Crystal - Updated: 26 Jun 2018 | comments*Discuss
Tax Relief Home Workers Capital

Working from home will usually mean a self-employed status, which means sorting out your own taxes. There are a number of tax breaks for self-employed home workers but there are also some stipulations to these allowances.

How Much Can I Earn Before I Need to Pay Tax?

Everyone is entitled to earn a set amount of money before they start paying income tax. At the moment the amount that can be made before any tax is due will be £11,085 (2018/19). Once this figure has been surpassed the income tax payments will be around 20% of any profit made. However, there are tax breaks available for self-employed people. The personal allowance does fluctuate each year and those over 65 can usually earn more before any tax is due.

What Expenses Can I Claim if I Work from Home?

Home workers can claim for a number of household costs. This can include the extra energy used to heat and light the house and any business calls made. But this relief is only allowed for the area of the home that is used for business. A business area is defined as a room or an area specifically set out for your business. A laptop set up on a kitchen table will not usually be classed as a business area. Extra water costs may also come into the tax relief area but all of these factors will be scrutinised by the tax man.

So I Can Claim for all Phone Calls and Internet Use?

Tax relief can be claimed on business phone calls only not personal use. The tax man will also not pay for telephone line rental. Certain Internet expenses can be claimed if the Internet is used as a business tool. Those working from home but employed by a company should actually ask the company to pay for line rental if used for business purposes.

Can I Claim My Mortgage as a Business Expense?

Business owners who do use their home as an office can claim a certain amount of tax relief on mortgages, rent and council tax. This can add up to a large amount especially for people with large mortgages. Again, there must be a defined space in the home that is used for business purposes. Tax relief may also be available if there was extra expense to fit out a room as an office in the home.

I Work From Home and Use My Car for Business Use, Can I claim?

A certain amount of tax relief is available when using a car within a business. The amount that can be claimed will be based on how much the vehicle is used for business purposes. A business owner may also be able to claim a certain percentage of capital allowance on their car. You may also be able to claim a certain amount in travel allowance if the travel is business related.

Can I Claim for Business Supplies?

Items such as computers, stationery and products used to run the business from home can be subject to tax relief. This will usually be claimed from a percentage of the capital allowance. Receipts will usually be required by the HMRC before this relief will be granted.

Can I Claim for Business Meals?

There are a number of different business related travel and subsistence costs that can be claimed for. This can include using public transport, staying in hotels, and meals. Other factors such as parking costs, congestion charges and even toll costs can all be subject to tax relief.

I Don’t Have Any Experience in Claiming, What Should I do?

Many new business owners who work from home will find the tax and self assessment aspect a daunting and scary prospect. Accountants can be used to sort out accounts and self assessment and they should be aware of every item that can be subject to tax relief. Of course accountants will cost money but they can often come up with tax breaks that the business owner would never think of. This reason alone is why many business owners employ accountants and they can be a cost effective business expense.

How Do I Claim all of These Expenses?

HM Revenue and Customs website should be the first point of call for anyone undertaking the self assessment process. Their website will have all the necessary information for anyone claiming tax relief. The process can be completed entirely online or through actual hard copy. Remember, there are fines and penalties for anyone who does not complete their self assessment by the necessary due date.

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