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May 11, 2023

Claiming WFH Expenses

Find out what expenses you can potentially claim whilst working from home.

With the rise of remote working, many employees and individuals now work from home on a full-time or part-time basis. This change in work setup has led to a lot of confusion about what expenses can be claimed when working from home. If you're an individual who has been working from home, it's important to understand what expenses you can claim to offset the additional costs you may have incurred. Here's what you need to know:

 

Understand what expenses can be claimed

The expenses you can claim when working from home fall into two categories: direct expenses and indirect expenses.

Direct expenses are expenses that you incur solely because of your work, such as the cost of a work-related phone line or the cost of a work-related internet connection. These expenses can be claimed in full.

Indirect expenses are expenses that you incur as a result of working from home, such as the cost of heating, lighting, and other household expenses that have increased as a result of working from home.  These expenses can be claimed but you will need to work out what portion relates to business.  More details on how to work this out below

 
Keep records of your expenses

To claim work from home expenses, you will need to keep accurate records of your expenses. This includes receipts, bills, and other documentation that shows the cost of the expenses you are claiming.


Create a designated workspace

Creating a designated workspace can help you to claim more expenses. If you have a separate room or area of your home that you use exclusively for work, you may be able to claim more expenses related to that space.

 

Calculate your expenses

Direct expenses can be claimed in full.  You will need to keep track of your bills and receipts for these expenses to prove they are wholly incurred for work purposes.

When claiming indirect expenses working from home, it's important to calculate the apportionment of indirect cost.  Apportionment is the process of dividing the total cost of an expense into the portion that is directly related to your work and the portion that is not. Here's how to calculate the apportionment of indirect costs:

1. Identify the indirect costs: Indirect costs include expenses such as heating, lighting, and internet, which are shared by both personal and work use.

2. Determine the amount of time the expense is used for work: For example, if you use the internet for work for 8 hours a day and for personal use for 4 hours a day, you would allocate 2/3 (8/12) of the internet expenses as work-related.

3. Determine  the area of your home used for work: If you have a designated workspace, you can use the area of that space as a percentage of your home to determine the portion of the indirect expenses that can be claimed. For example, if your designated workspace is 10% of your home's total area, you can claim 10% of your heating and lighting expenses as work-related.

4. Calculate the apportionment: Once you have determined the amount of time and area used for work, you can calculate the apportionment of your indirect expenses. For example, if your heating and lighting expenses are £200 a month and your designated workspace is 10% of your home's total area, you can claim £20 (10% of £200) as work-related.


Alternative method for claiming work from home expenses

As an alternative to claiming expenses using receipts and invoices, HMRC offers a flat rate allowance. The allowance is £6 per week, which means that you can claim up to £312 per year. You can either claim the allowance through your employer, who can pay it to you tax-free, or you can claim it directly from HMRC through yourself-assessment.

It's worth noting that you can't claim both the £6 a week allowance and tax relief on additional expenses, such as internet and phone bills or equipment costs. You'll need to choose which method is most appropriate for your circumstances.

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