Working from home and hybrid working have become increasingly more popular since the COVID-19 pandemic. From 2022 – 2023, 44% of the UK’s workforce would either work from home or work on a hybrid basis.
Whilst working from home comes with flexibility and an improved work-life balance, there are also some inconvenient expenses that you should be aware of to ensure that you can manage your finances to the best standard.
In today’s blog, we will take a look at the top working from home expenses to be aware of, why you can and can’t claim tax relief on certain expenses and how our team of tax experts at DH Business Support can help.
What Are the Top Costs to Keep in Mind When Working From Home?
There are multiple different costs that you must keep in mind when you work from home, such as increased internet costs and electricity bills. There is also a selection of other household costs to think about. Let’s take a look at some of the costs to be aware of so that you can ensure that you are factoring these into your tax bill.
1 – Utility Bills
One of the most significant household expenses when you’re working from home is paying utility bills. Working from home will increase the usage of electricity and heating, resulting in rising costs.
Using electricity is a necessity for most professionals who work from home, and utility bill increases are often unavoidable. Although many individuals remain conscious of their electricity and heating usage by implementing energy-saving measures, a lot of people don’t.
Electricity bills alone can cost up to £1,923 a year for the average household of 2-3 people. The good news is that if you use your broadband for both personal and business purposes, you could claim a percentage of this on your tax bill.
2 – Internet and Technology
Having a stable and reliable internet connection is one of the most essential parts of remote working, and investing in high-speed internet can come at a cost. The average person spends around £26.90 per month on internet costs, which will add up on your bills over time.
As well as dealing with broadband costs, professionals require modern technology to complete their work, including laptops. If you’ve purchased a laptop solely for business use, you should be able to claim tax back on the full cost as a capital asset.
2 – Home Office Setup
Having a workspace in your home for remote working is essential, whether that be a home office or a dedicated workstation in your home.
Office chairs, desks, general office supplies, and stationery are all necessary pieces of equipment needed to help make working from home easier. Whilst home office equipment is essential, it is also expensive, however, you can potentially claim these expenses back in tax relief.
Am I Eligible to Claim Working From Home Expenses?
If you are employed by a company, you can claim tax relief for working from home if:
- Your job requires you to live a distance away from your office.
- Your employer doesn’t have an office, and therefore, you have no other option but to work from home.
If you are employed by a company, you can’t claim tax relief when working from home if:
- Your employer has an office, but you cannot go there sometimes because it’s full
- It is in your contract that you can work from home a percentage of the time.
If you are self-employed, you are required to complete a self-assessment tax return every year. You can claim back on certain work-related expenses if you are self-employed. The total value of the expenses from the year will be deducted from your business’s yearly revenue. The amount that is left after deductions is the amount that you will be taxed on for that year.
For example, if you made £50,000 and claimed £10,000 worth of expenses, HMRC will only ask you to pay tax on £40,000 for that tax year.
You must keep all receipts and evidence of your business expenses if you are hoping to claim them back. Whilst you may not be asked for these records upon your self-assessment tax return, the HMRC can request these at any time. If it is found that you have claimed incorrectly on your tax return, then you may face a penalty charge.
When You Can and Can’t Claim Tax Relief
You’ll be glad to know that you’re able to claim tax relief on certain expenses if they’re significant while working from home. Some of the expenses you can and can’t claim for are displayed on the table below:
| Expense | Can You Claim Tax Relief? | Notes |
| Council tax | Partial | You can claim a proportion of council tax if you work from home and are self-employed, based on business use. |
| You use your own money for items you need to work with | Yes | As long as your employer hasn’t reimbursed you for these items, you can claim tax relief. |
| Food & drink | No | Food & drink are considered personal living costs and therefore not applicable for tax relief. |
| Property repairs | Yes | You can claim back expenses on property repairs if they are directly related and necessary for working from home. |
| Choosing to work from home. | No | If your contract allows home working, but it is not mandatory, then you can’t claim back working from home expenses. |
| Clothing | Yes | If you are required to wear a certain uniform for work, then you can claim back tax on this, only if you are required to pay for it. |
| Travel costs | Yes | If you are required to travel for work, then you can claim back travel expenses such as flights, accommodation and fuel costs. |
How to Claim Tax Relief
You can claim tax relief on items that you use your own money for, which are required for your job, and as long as you only use these things for work purposes. You can’t claim tax relief if your employer has reimbursed you. However, if your employer has only reimbursed you a percentage, then you can claim tax relief on the other percentage that they haven’t reimbursed you for.
The way that you claim tax relief depends on what you are claiming for, and this can be found on the GOV.UK website. It is important to note that if you complete a self-assessment tax return, then you must claim your tax relief through your tax return instead.
Looking For a Smarter Way to Manage Your Finances?
Here at DH Business Support, our team of friendly and knowledgeable tax advisers is on hand to help you with all your tax filing needs. We offer expert tax advice and can help you minimise your tax costs.
Helping a wide range of clients with self-assessment tax returns, our team is here to simplify the process while informing you of what can and can’t be claimed. Your self-assessment tax return can be completed with our trusted team of specialists here at DH Business Support.
We aim to improve the service that accountants provide; by offering clear communication and transparency, we’ve been fortunate enough to work with clients from a range of locations across the country and maintain great client rapport.
If you’d like to find out more about our services, please don’t hesitate to contact us today. We look forward to hearing from you.