It’s pretty uncertain out there. Businesses are preparing for postponements, cancellations and potentially staff illness. If you are working from home because of coronavirus, one thing is certain; tax deductions are available to help you with costs. Here’s what’s on offer whether you work for yourself or someone else:
When you work for yourself, you complete a self assessment tax return each year. Self assessment provides the option to claim allowable expenses. These are expenses that are deducted from your overall revenue before your income tax is calculated.
Here’s an example: if you make £40,000 in sales, but you have £10,000 in allowable expenses, HMRC will only calculate the tax you pay based on £30,000 of profit. Brilliant!
Here are the types of allowable ‘work from home’ expenses;
You can calculate your work from home expenses in two ways. 1. You claim the proportion of the costs in line with the space your business uses. So if you have a four-room flat and only use one room for your business, you can claim one quarter of your costs. 2. You can use the hours you work from home each month. So, if you work from home 25-50 hours, you can claim £10 per month, 51 to 100 hours, you can claim £18 per month, and if you work 101 or more you can claim £26 per month.
Choose the method that’s best for you by visiting HMRC or talking to your accountant!
The first question to ask is whether you self-elected to work from home. The second is whether your employer has already reimbursed you. If you answer ‘yes’ to either of these questions, you’re out of luck when it comes to tax claims. However, if your employer required you to work from home, and hasn’t reimbursed you, you may be able to claim back some tax.
Here are some of the things you can claim for:
Check what you can claim using HMRC’s calculator.
Remember! You must keep receipts for all the expenses you incur in order to claim them. The best way to keep track of your working from home costs is to use easy accounting software like Clear Books. Take out a free 30 day Clear Books trial and keep track of your receipts today.