Where you undertake most of your company work from your home there are three methods of reclaiming expenses.
You can either simply claim the HMRC’s approved Homeworking allowance of £6 per week. Easy to calculate and claim but you may be able to claim more using the other methods.
You can make a claim based on actual costs. The business proportion of costs which can be included are:
Light and heat.
Home telephone calls.
Insurance, where business equipment insured under that policy.
Repairs of business equipment.
Cleaning costs of your workspace.
As an employee you cannot reclaim the costs of:
Expenses that do not have receipts i.e., cash wages of a cleaner.
Detailed records and receipts are required however not all of household expenses can be claimed.
Creating a licence agreement with your company to allow it to occupy part of your property. It then pays you rent and you then claim all your expenses under Self-Assessment Return.
You may claim a proportion of your home expenses although there is a higher rate restriction on mortgage interest. Check with your mortgage provider or landlord whether you can create this type of licence. Again, detailed records are required and you must also complete the land and property section of your tax return. Let me know if you want a draft licence agreement.
If you provide your own business equipment you may claim capital allowances on your costs.
An employer can supply an employee with one mobile phone if the phone remains the employer’s property. The contract must therefore be in the employer’s name. In these circumstance the employer can claim all of the costs while a taxable benefit in kind will not arise on the employee.
As there is a ‘use of asset’ tax benefit charge if an employer lends you an asset that is used privately, it is advised that the employer sets strict written usage restrictions. This may not be possible for items of furniture, which are likely to be used privately unless the home office is closed off from the main home.
Your company may be able to reclaim VAT on certain building works it does to your property, but as any claim will be blocked if you benefit in your personal capacity, it may be unwise to do so.