COVID-19 caused the number of people who work from home to increase. But even as lockdown measures are eased and social distancing rules relax, many workers are remaining in their slippers and continue to work from home, meaning they may consider creating a home office.
Some big companies have already pledged to keep remote home working on the table with Google and Facebook telling their staff they can work from home at least until the end of 2020 if applicable. And Twitter has announced their staff can work from home forever.
Remote working will have a huge impact on many other things, including the property market as people swap the big smoke for leafy suburbs. But it will also change the insides of our homes with workers requiring dedicated office spaces at home.
Naturally, the type of home office you create will be determined by the space you have available and your budget. Some may choose to add a new desk and office chair to the corner of a room or transform a spare bedroom, while other may think bigger and add an outbuilding to a garden or convert a loft.
Building work aside, in any new home office you are probably going to need some staple items, namely:
Sometimes these will be supplied or paid for by your employer. But if you have to buy them yourself, you may be wondering if you can claim these as expenses.
Yes, if you make a purchase that is essential for you to do your work from home then you can claim tax relief on it. This includes the items listed earlier and other purchases such as bookcases, printer ink etc.
Some purchases will not be granted tax relief. These are purchases that give you personal benefit and are not exclusive to working use. For example, expect any claims for rent, desk plants and non-essential working items to be rejected.
If you want to claim for home office expenses, you can do so with form P87. This form can be found and downloaded from the HMRC website.
However, due to COVID-19, these sorts of claims are expected to surge and cause delays in HMRC changing your tax code. For this reason, it is paramount that you get the form right first time to avoid further delays. This could mean getting support from a UK accountant, or asking your accountant to fill it in for you.
They may be able to identify items you have missed form your claim and generate further tax benefits, too!
You will get tax relief that reflects the amount of tax you pay. For most people that will be 20%. For example, if you purchase an office chair for £100, you will be given tax relief at 20%, meaning you will get £20 knocked off your income tax bill.
And if you have no tax to pay, you would receive a cheque for the overall amount owed back at the end of the tax year.
So, can you really claim an outbuilding or loft conversion as a home office expense? The short answer is no. The reason you cannot claim contractor expenses for building you a home office is that there is personal benefit. Your property will increase in value due to the new addition and you will own a more valuable home that you could benefit from if you sold it.
However, some aspects of a loft conversion or bedroom renovation might be successfully claimed. These are decorative aspects, and you can still claim any desks you buy or other items discusses earlier.
There could be further implication on loft conversions and new outbuilding in relation to Capital Gains Tax and Principal Private Residence Relief. The bottom line? If you are planning this and want to know where you stand, always speak to expert UK accountants first.
Running a home office is undoubtedly going to increase some of your household bills. You may not worry about this as you could be saving compared to the daily commute and fuel costs. However, you might still be able to get money for your home office expenses.
If you are made to work from home because you have no option to work from an office, you can claim costs on the proportion of bills that your home office uses. To make an accurate claim, it is best to speak with a qualified UK accountant.
Your employer can also pay you £6 per week for any further costs, but neither this or expenses can be claimed if you had a choice to work from a business premises and chose to work from home. Self-employed people who work from home fall under different rules and can keep things simpler with simplified expenses, which are fixed monthly costs for working from home.
For further guidance and support, get in touch with Yorkshire Accountancy. Our UK team is ready to help your remote working dream!