We know that self-employed life can feel a little lonely and lacking in support. It can also be very busy. To save you time, we’ve put together a list of financial support available when your home is also your workplace.
If you’re not self-employed, but you’re working from home for your employer, there’s financial aid available to you too. This might be particularly relevant as we continue to navigate the ongoing COVID pandemic.
In this article, we look at financial support available to self-employed business owners, as well as employees working from home throughout COVID.
Types of tax relief to claim when working from home as a self-employed worker
There is a whole array of tax relief available for self-employed workers, including part of the running costs of your home if that’s where you work from. Claiming can help keep cash flow healthy as well as your stress levels at bay.
Typical examples of costs you can claim when working from home
- A portion of mortgage interest on your home (not including capital repayments).
- A portion of your rent, if you rent your property from a landlord.
- Gas and electricity costs (heat and light) for the rooms which you use when working at home for your business or employer.
- Telephone and internet connection (based on a split between business and personal use)
- Repair or maintenance of a room that you use specifically for your job, such as a home office. You might also be able to claim for a portion of repairs or maintenance on the whole property, such as the roof. You can’t claim on a room which you don’t use for your work at all (e.g. the bathroom).
Claiming for water bills when working from home
Unfortunately claims for working from home don’t include water bills if your usage is only on a minor day-to-day basis.
Some businesses, such as a car washing service or home-working hairdresser, do require significant water usage. In this case you’ll need to apply to your provider for a separate charge, and then claim back the cost.
Financial support for employees working from home
Thanks to COVID and a growing employer awareness, working from home is increasingly common. While working from the comfort of your own surroundings is often a bonus, it does come with additional costs for things like:
- Domestic utilities (gas, electric, heating, light)
- Home contents insurance
- Internet connection
- Phone bills
- Equipment you use to do your job at home
Whilst you’re likely to be paying at least some of these expenses anyway, working from home can make them more expensive.
Making a claim when you work from home for your employer
The good news is that you can claim tax relief on these extra costs through HMRC. You could be eligible to claim tax relief of £6 per week, without having to keep evidence of extra costs.
The £6 per week allowance is a type of tax relief, based on the rate that you pay tax.
So, a 20% rate taxpayer gets 20% of the relief, worth £1.20 per week, or £2.40 per week for the higher 40% rate taxpayer.
It’s worth noting that this tax relief is not available if you choose to work from home. It is also not applicable on costs that would stay the same whether you’re working from home or not, such as mortgage capital repayments and council tax bills.
Alternatively, you can claim tax relief on the exact value of the extra costs that you incur above the weekly amount (as a result of working from home).
This is a more attractive option to those whose are significantly higher than the standard £6 per week allowance set by the government.
If you do choose to do this option, you will need to provide evidence such as invoices, utility bills and receipts.
Some people do find it much easier to simply claim the flat rate £6 per week rather than having to apportion these extra costs.
Working from home due to Coronavirus?
As of October 2020, if you have had to work from home at any point, for any length of time (even if it was just for one day) as a result of COVID, you can claim relief for the full tax year.
You will only have to claim once and you will receive full relief for the entire 20/21 tax year (starting April 2020).
This includes those who are working from home part-time, and those who are working from home despite other colleagues going into the office.
If you have had to purchase items such as equipment or furniture in order to carry out your role from home, employers can now reimburse you for this in full and tax-free for the 20/21 tax year.
Pre-COVID and following the 20/21 tax year (ending April 2021), employers are required to pay this back in benefit-in-kind. It means that you will pay both tax and national insurance. Check if you’re eligible to claim expenses when working from home.
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