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Working from home has become more common in recent years, especially with the rise of remote work during the pandemic. If you work from home, even if it’s only part-time, you may be eligible to claim tax deductions on some of the costs of your home office. Claiming these expenses, where applicable, can help lower your overall tax bill. Here’s an overview of some of the main tax deductions you can potentially claim as someone who works from home in the UK:
Home Office Deduction: One of the biggest potential deductions for remote workers is the home office deduction. This allows you to deduct a portion of your household expenses based on the percentage of your home used for business purposes. To qualify, you must regularly and exclusively use part of your home for work. This can be a designated home office room or just a corner of another room.
To calculate the deduction, first, determine the total size of your home in square feet and the total size of the workspace in square feet. Then divide the business space square footage by the total home square footage to find the percentage used for business. You can deduct that percentage of household expenses, including rent/mortgage payments, council tax, utilities, repairs and maintenance, insurance and more.
Equipment and Furniture: If you have purchased equipment like a computer, printer, scanner, desk, chair or other items specifically for your home office, these may be deductible expenses. There are a few ways to claim deductions on equipment. If an item costs less than £50, you can claim its full cost in the tax year you purchased it. For more expensive items, you deduct a percentage of their value each year based on capital allowance deductions.
Business Phone & Internet: If you use your home phone or internet for business purposes, you can claim a deduction on your monthly bills. To calculate this, calculate your total monthly phone, mobile and internet costs. Then estimate the percentage you use each for business vs personal activities. The business percentage of the costs are deductible.
Business Supplies: Any supplies you need, like paper, pens, ink cartridges and other stationery for your home office, are deductible business expenses. Keep receipts throughout the year to add up these costs.
Business Travel: Travel costs related to your work activities are eligible for deductions. This can include mileage when driving your car for business purposes calculated per mile or public transportation fares for work-related trips. Parking fees and tolls during business travel can also be deducted. Keep detailed records of dates, distance, and purpose of trips to substantiate these expenses.
Professional Fees & Training: Professional association dues related to your job are deductible, as are the costs of continuing education, training programs, conferences, and seminars that help maintain or improve your business skills.
Self-Employment Tax Deductions: Those who are self-employed can deduct all the costs mentioned above, plus additional tax deductions related to their self-employment income and activities. This includes deductions for advertising, licensing fees, legal and professional services, accounting fees, and business meals and entertainment related to their self-employment.
There are specific record-keeping requirements to ensure these deductions comply with HMRC rules. It would help if you generally had receipts documenting each expense, records of business vs personal use, and proof that expenses were necessarily incurred for your business activities. Taking time to track deductible expenses properly makes tax time easier. Claiming allowable deductions can lower your taxable income and help maximise your tax refund. Just maintain proper records and only claim deductions for legitimate business purposes. Consult our tax advisors for assistance determining what expenses are deductible and how to calculate and claim them on your tax return. Proper claims can save remote workers hundreds or thousands of pounds yearly on their tax bills.