Self Assessment - claiming back tax on office furniture
Discussion
If I’m employed PAYE (although I have to fill out a self assessment), but now have to work 100% at home due to employer instruction (offices closed, do not come in), does anyone know if I am able to claim the expenses of a desk, monitor, needed to enable that home working and that the employer has declined to provide, in my self assessment?
The annual investment allowance verbiage on HMRC seems to indicate yes because it’s not optional and they’re not funding, but is very non committal as ever so I thought I’d check here to see if anyone could confirm or deny.
The annual investment allowance verbiage on HMRC seems to indicate yes because it’s not optional and they’re not funding, but is very non committal as ever so I thought I’d check here to see if anyone could confirm or deny.
Yes you can clam back tax relief on home office expenses.
You just have to be able to justify the calculation. Ive been home based PAYE and self employed, on self assessment for 14 years. Always done the method :
https://caseron.co.uk/work-from-home-allowance-cal...
you end up with a total figure you put in "other expenses", so long as you have bills to backup its all fine. For me works out I get tax relief on about a grand a year, so £400 towards running the home office.
You just have to be able to justify the calculation. Ive been home based PAYE and self employed, on self assessment for 14 years. Always done the method :
https://caseron.co.uk/work-from-home-allowance-cal...
you end up with a total figure you put in "other expenses", so long as you have bills to backup its all fine. For me works out I get tax relief on about a grand a year, so £400 towards running the home office.
We've been advised by our Tax Advisers that you can, as long as you're not getting the £26pcm from your employer. It's either one or the other.
I'm not 100% sure they're correct. there was an announcement by the Chancellor of 16th March about tax relief for home office equipment which (to me) implies that there should be some additional tax reliefs being offered due to COVID19 but our advisers are umming and ahhh'ing.
I'm not 100% sure they're correct. there was an announcement by the Chancellor of 16th March about tax relief for home office equipment which (to me) implies that there should be some additional tax reliefs being offered due to COVID19 but our advisers are umming and ahhh'ing.
For adhoc use of home office the allowance went up to £26 a month (an increase over last year) your employer could pay you this tax free amount or you could claim it yourself. Thats £312 a year.
If you have a smaller house with lower cost bills that may be proportionate to what you could have received by working it out by the more complex method where you need to keep records for 5 years etc. If you have a £500k mortagage and £3k council tax bill, definitely work out the real numbers.
Do the maths and see if the complex way is worth it to you.
Dont go too mad spending though thinking you are getting it all back, its just tax relief on your expenditure. You spend £1k on a fancy office chair and normal rate tax payer will get £200 of that back...its still cost you £800.
If you have a smaller house with lower cost bills that may be proportionate to what you could have received by working it out by the more complex method where you need to keep records for 5 years etc. If you have a £500k mortagage and £3k council tax bill, definitely work out the real numbers.
Do the maths and see if the complex way is worth it to you.
Dont go too mad spending though thinking you are getting it all back, its just tax relief on your expenditure. You spend £1k on a fancy office chair and normal rate tax payer will get £200 of that back...its still cost you £800.
I'm actually looking at it from the Employers side.
At the moment we're providing a lot of staff with desks/chairs/docking stations/monitors. The cautious approach would be to declare these as taxable benefits and the Employer to cover the tax/NI (which is what we're doing). However I am wondering if we can argue for these to not be classed as taxable benefits. KPMG have told us that can only be the case if the equipment was wholly/necessarily/exclusively for work purposes (which is quite hard to prove).
At the moment we're providing a lot of staff with desks/chairs/docking stations/monitors. The cautious approach would be to declare these as taxable benefits and the Employer to cover the tax/NI (which is what we're doing). However I am wondering if we can argue for these to not be classed as taxable benefits. KPMG have told us that can only be the case if the equipment was wholly/necessarily/exclusively for work purposes (which is quite hard to prove).
Beware - if you start claiming expenses for a "home office" then that part of your house is no longer your "main residence" and will attract Capital Gains Tax when you sell the house.
IMO it's almost certainly not worth that risk for an office chair, a stapler and a packet of paper clips... Unless you can persuade your employer to pay for them as a genuine expense of the employer's business I'd be inclined to forget it.
IMO it's almost certainly not worth that risk for an office chair, a stapler and a packet of paper clips... Unless you can persuade your employer to pay for them as a genuine expense of the employer's business I'd be inclined to forget it.
The normal "allowance" available for the purchase of office furniture would be under the Capital Allowance rules. These are not "expenses" in the normal way because the purchase of furniture and equipment would normally be treated by an accountant as an addition to the business' "Fixed Assets" - and consequently allocated to the business' balance sheet - and not its profit and loss account.
HMRC follows a similar principle. It agrees that additions to fixed assets are not expenses that can be offset directly against income. Instead, HMRC expects the sole trader (or employee) to use the appropriate Capital Allowance applicable to the nature of the asset in order to make a claim.
An employee who HAS to buy an asset for his/her job using his/her own money can make a claim under the relevant Capital Allowance
However, note that I have emphasised the word "has". This is because an employee can only claim for ANY expense or capital allowance if they are FORCED to make that expenditure by their employer. For example, if the employer says you MUST buy a specific type of laptop for your work but makes you pay for it, then you can make the appropriate Capital Allowance claim. However, if you just CHOSE to buy a laptop, even if it is 100% for work, you CANNOT make a claim.
The basic rule is that expenditure claimed by an employee must be "wholly, exclusively and NECESSARILY in respect of their work".
Capital Allowances
If you HAVE to buy equipment for work, that your employer does not pay for, you MAY be able to claim capital allowance tax relief. The example HMRC gives is of a filing cabinet purchased by an employee for work, but not paid for by the employer.
You can not claim relief for motor vehicles. These are dealt with on a different part of your tax return.
HMRC follows a similar principle. It agrees that additions to fixed assets are not expenses that can be offset directly against income. Instead, HMRC expects the sole trader (or employee) to use the appropriate Capital Allowance applicable to the nature of the asset in order to make a claim.
An employee who HAS to buy an asset for his/her job using his/her own money can make a claim under the relevant Capital Allowance
However, note that I have emphasised the word "has". This is because an employee can only claim for ANY expense or capital allowance if they are FORCED to make that expenditure by their employer. For example, if the employer says you MUST buy a specific type of laptop for your work but makes you pay for it, then you can make the appropriate Capital Allowance claim. However, if you just CHOSE to buy a laptop, even if it is 100% for work, you CANNOT make a claim.
The basic rule is that expenditure claimed by an employee must be "wholly, exclusively and NECESSARILY in respect of their work".
Capital Allowances
If you HAVE to buy equipment for work, that your employer does not pay for, you MAY be able to claim capital allowance tax relief. The example HMRC gives is of a filing cabinet purchased by an employee for work, but not paid for by the employer.
You can not claim relief for motor vehicles. These are dealt with on a different part of your tax return.
Pheo said:
So, if I need to buy a desk because it’s doing my back in, does that count?
Super confusing this.
Nope. It has to be something forced upon you by your employer - or something that you would be normally expected to acquire because of the terms of your employment contract.Super confusing this.
That's what the "necessarily" refers to.
I think rockin has an interesting point. If we start claiming tax relief on electricity, internet and effectively declare our homes as workplaces, are we then opening a can of worms around insurances, and maybe even for particularly creative councils thinking they can charge some sort of business rates?
I think I’ll settle for saving more on petrol than it costs to stay at home.
I think I’ll settle for saving more on petrol than it costs to stay at home.
abzmike said:
I think rockin has an interesting point. If we start claiming tax relief on electricity, internet and effectively declare our homes as workplaces, are we then opening a can of worms around insurances, and maybe even for particularly creative councils thinking they can charge some sort of business rates?
I think I’ll settle for saving more on petrol than it costs to stay at home.
All the relevant info is on HMRC tax website. There is a difference between working from a home office, or space at home with desk etc versus running a business from home. Its also different if you are PAYE, sole trader, LTD company etc. If the latter I would take advice of accountant. I think I’ll settle for saving more on petrol than it costs to stay at home.
For someone using some space at home to work on laptop, HMRC has already said you can have £26 a month towards the cost, no questions asked, no records needed.
https://www.gov.uk/tax-relief-for-employees/workin...
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