Home worker tax relief on mortgage costs?

[anonymous-user]

A mate was round the other day and he suggested that as a homeworker, he was able to claim back tax relief on a portion of his mortgage interest?
I know that you can claim back tax relief on a portion of energy bills. Is there any truth in this?

[oop north]

A self-employed person can but not sure about employees - a company director could get the company to pay rent and offset the costs against the rental income, but not get a deduction of the costs otherwise (I don't think). If you can, all household costs, so council tax, leccy, gas etc. Deciding the proportion is tricky - I think the revenue line is you can use any reasonable basis- So if you have one room of, say, six total in a house used for business, then could claim one sixth of the costs. Having one room exclusively for work can lead to capital gains tax problems though. Best to do some hobbies in there for a bit of the time

[bogie]

If your employment contract states you work from home, and you have a dedicated room for it, then its straightforward so long as you can justify expense, and keep records, state below calculation in your tax return notes, in business expenses e.g.

add together all yearly household bills; water, light, heat, ctax, mortgage interest, insurances
divide by number of habitable rooms including the office
times by percentage of time office is in use solely for business
equals your expense value for the year, you get tax relief on this

I have a home office, its my contractual base, im in it 70% of the time, works out I get tax relief on about £1500 per year, so about £600 per year tax refund towards the running cost of the office

[bmwmike]

I work from home PAYE and claim the weekly allowance of four quid or whatever it is, AFAIK that's all an employee can get.

[Jockman]

Go into this with open eyes. Insurers may need to be informed of business activity at a domestic premises and fully evaluate the Capital Gains implications as the business portion may well fall outside of your Primary Residence Exemption.

[trickywoo]

As said above if you are self-employed its much easier. If you are employed but working from home £4 a week is the limit before you have to start justifying claims in detail.

[bogie]

bmwmike said:

I work from home PAYE and claim the weekly allowance of four quid or whatever it is, AFAIK that's all an employee can get.

I used to do that when I occasionally worked from home as a PAYE employee. When I went full time home or travel to customers I decided to do the more complex method

Check with home insurer, most allow a home office, for sat working at computer and using a phone. However this is different from running a business from home. Depends on terminology I guess in your policy

[anonymous-user]

I've been working exclusively from home as both contractor ( although on PAYE from the contracting company who contract me out to another company) and employee for about 10 years.

Can I now back-claim for 10 years at roughly £200 a year?

I'm guessing no but it's a lovely thought.

[Sharted]

garyhun said:

I've been working exclusively from home as both contractor ( although on PAYE from the contracting company who contract me out to another company) and employee for about 10 years.

Can I now back-claim for 10 years at roughly £200 a year?

I'm guessing no but it's a lovely thought.

Just 6 years as I recall.

[bogie]

garyhun said:

I've been working exclusively from home as both contractor ( although on PAYE from the contracting company who contract me out to another company) and employee for about 10 years.

Can I now back-claim for 10 years at roughly £200 a year?

I'm guessing no but it's a lovely thought.

as above - 6 years, the £4 a week allowance without records. If you want to claim more like the true cost you will need all your bills/mortgage statements etc from the time period. You need to have records, should HMRC ask for your calculations

[anonymous-user]

Result - many thanks guys. I'll go the simple £4 route.

I do this via my tax return I presume or just contact the tax office seperately?

[Ozzie Osmond]

Jockman said:

....fully evaluate the Capital Gains implications as the business portion may well fall outside of your Primary Residence Exemption.

^^^ Absolutely this. Proceed with great caution.

[anonymous-user]

Jockman said:

Go into this with open eyes. Insurers may need to be informed of business activity at a domestic premises and fully evaluate the Capital Gains implications as the business portion may well fall outside of your Primary Residence Exemption.

Would that still be the case if you claim the basic £4 per week?

[Jockman]

garyhun said:

Jockman said:

Go into this with open eyes. Insurers may need to be informed of business activity at a domestic premises and fully evaluate the Capital Gains implications as the business portion may well fall outside of your Primary Residence Exemption.

Would that still be the case if you claim the basic £4 per week?

Bottom line, Gary, I've never done it but I'm flagging it up as something to bear in mind.

Happy to be corrected but this may be targetted at people on a larger scale who actually have their home as their business address. I would be shocked if £208 pa affected your PRE.

https://www.gov.uk/tax-sell-home

Edit: Just worked through an example on HMRC site and there will be a loss of PRE for that % of the property unless...."Don’t count using a spare room occasionally as an office or having a single lodger."

Edited by Jockman on Thursday 9th June 08:50

[anonymous-user]

Jockman said:

garyhun said:

Jockman said:

Go into this with open eyes. Insurers may need to be informed of business activity at a domestic premises and fully evaluate the Capital Gains implications as the business portion may well fall outside of your Primary Residence Exemption.

Would that still be the case if you claim the basic £4 per week?

Bottom line, Gary, I've never done it but I'm flagging it up as something to bear in mind.

Happy to be corrected but this may be targetted at people on a larger scale who actually have their home as their business address. I would be shocked if £208 pa affected your PRE.

https://www.gov.uk/tax-sell-home

Edit: Just worked through an example on HMRC site and there will be a loss of PRE for that % of the property unless...."Don’t count using a spare room occasionally as an office or having a single lodger."

Edited by Jockman on Thursday 9th June 08:50

Food for thought. My office is also a music room where I spend a load of time...but still a risk I guess.

[Jockman]

garyhun said:

Food for thought. My office is also a music room where I spend a load of time...but still a risk I guess.

My wife has a sofa in her beauty room.

[anonymous-user]

Jockman said:

garyhun said:

Food for thought. My office is also a music room where I spend a load of time...but still a risk I guess.

My wife has a sofa in her beauty room.

[anonymous-user]

OK - looking into this I can go back to the tax year 2011/12. However I can find no information on flat rates for any years subsequent to the current one which is 26GBP per month.

Does anyone have access to these rates (I'm not even sure if flat rate was available before 2013) before I resort to a call to HMRC?

Thanks
Gary

[Eric Mc]

And employee can only make a claim for "Use of Home as Office" type costs if it is stipulated as one of the terms of employment that they MUST work from home.

If the employee CHOOSES to work from home, then no claims can be made.

[anonymous-user]

Eric Mc said:

And employee can only make a claim for "Use of Home as Office" type costs if it is stipulated as one of the terms of employment that they MUST work from home.

If the employee CHOOSES to work from home, then no claims can be made.

That's why I asked - it's in my contract that I am a home based worker.