Many self-employed people work as sole traders from home but as a result of the pandemic, many more employees have been experiencing what it’s like to also work from home. Whether you work from home all the time or just part of the working week, it does bring with it a new set of challenges and some additional costs. Did you know that as a sole trader or an employee working from home, tax relief can be applied for to cover the costs incurred from working from home?
In April 2020, new concessions were brought in for employees working from home due to the coronavirus pandemic. There is a weekly rate which can either be paid or claimed as tax relief and it also applies to the 21/22 tax year as the impact of pandemic home working is still very much with us.
Those who are employed but working from home, whether full-time or just part of the time can claim for the costs of things like electricity, gas, telephone line and water. The whole bill cannot be claimed, only the additional costs on top of what would normally be paid and evidence of how this figure was arrived at might be asked for. If this is too difficult to calculate, a standard rate of £6 per week can be claimed instead. This relief is not payable to people who choose to work from home. For advice from Swindon Bookkeepers, go to a site like Swindon Bookkeepers Chippendale and Clark
An employer might have paid you these additional costs or the £6 standard rate and if this is the case, you cannot claim it again from the government. For those who haven’t received the payment, this can be applied for using the government gateway website. The payment is likely to be received as a change to your tax code and a reduction in tax.
Sole traders can also claim expenses for using their home to work from. Additional costs for gas, water and electricity can be included in a tax return but evidence of this will need to be shown. A proportion of all costs can also be claimed which includes council and mortgage/rent payments, for example. This proportion is calculated by the number of rooms in your home and how many days you work in one of those rooms.
A standard deduction is also available which equates to £10 per month for between 25 and 50 working hours per month, rising to £26 a month for working more than 100 hours at home. This standard rate does not include business use of phone lines or the internet so the business element of these costs can also be claimed for. All expenses should be listed on the self-assessment tax return completed each year.