Working From Home Tax Relief 2022
Mustafa Yusuf • 16 May 2022
Time to read: 3 minutes
Are you still working from home? HMRC has provided guidance and allowances to cover some expenses whilst working from home, for both self-employed individuals and those working through a limited company. In this blog post, we're exploring working from home tax relief 2022.
Limited companies
- The use of home allowance is an allowance granted by HMRC to allow limited companies to claim job expenses whilst working from home.
- Limited companies can claim tax relief of £6.00 per week which equates to £312.00 for the financial year. HMRC states that a limited company is able to claim tax relief for job expenses if they are operating from home on a regular basis. This was introduced to allow people who work from home to claim some of their household expenses. HMRC does not allow for the full cost of personal expenses, such as home bills, to be recognised as a business expense.
- The benefit of this tax relief is that it will be classified as a business expense which will ultimately help reduce the corporation tax bill.
Self-employed
- Those who are self-employed and working from home can claim a proportion of their costs such as rent, electricity, and internet bills.
- This is calculated by dividing the costs by the number of rooms which are used at home for business or, the amount of time an individual spends working from home.
- To calculate this, please see the example below from HMRC:
You have four rooms in your home, one of which you use solely as an office.
Your electricity bill for the year is £400.00. Assuming all the rooms in your home use equal amounts of electricity, you can claim £100.00 as allowable expenses (£400.00 divided by 4).
If you worked only one day a week from home, you could claim £14.29 as allowable expenses (£100.00 divided by 7).
- Alternatively, this can be calculated through a flat rate system based on the hours worked at home, however, an individual will need to have worked more than 25 hours at home per month in order to use this.
- The flat rate per month is as follows:
Working from home between 25 – 50 hours per month - a flat rate of £10.00 per month
Working from home between 51 – 100 hours per month - a flat rate of £18.00 per month
Working from home above 101 hours per month - a flat rate of £26.00 per month
- To give an example, if an individual works from home for 75 hours per month for 6 months, the claimable expense would be £108.00 (£18.00 x 6 months).
- The use of home allowance is a benefit as the expenses can be used to offset against income which will help reduce the self-assessment tax liability.
There are also other allowances and expenses you can make use of. Please contact us for further information.
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For more information:
https://www.gov.uk/expenses-if-youre-self-employed
https://www.gov.uk/simpler-income-tax-simplified-expenses
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