Tax relief working from home reduces a portion of the financial burden incurred for job or business purposes. This works by reducing the taxable income with the allowable expenses. Some work-from-home employees do not know they can be eligible for tax relief with their setup. In the case of the self-employed, figuring out the right expenses to claim is a baffling task.
Here are some they might not know about tax relief working from home 2024 and other relevant information.
Tax Relief Working from Home for Employees
Tax relief working from home part time or full-time is available to employees who are required to work in their houses straight throughout the week or some days given the following circumstances:
- Their job requires them to live far from the office.
- Their employer does not have a physical office in the UK.
They cannot claim tax relief working from home UK if they are working remotely for the following reasons:
- Their employer offers them the option whether to work at home, in the office, or alternate.
- It is their choice to work from home.
- Their employer’s office tends to get full on some days.
Employees can claim tax–relief for the following eligible expenses:
- Business phone calls
- Gas and electricity for the work area
They cannot claim relief on expenses incurred for dual purposes, such as broadband or rent. Employees can claim a flat–rate of £6 per week from 6 April 2020 without evidence, or the exact extra costs with receipts.
How much tax relief they get is based on their income-tax rate. They can make a claim to HMRC for the current and previous four tax years online. However, they cannot claim back up to the years for when they worked at home due to COVID-19.
Get updated about the latest changes on income and National Insurance taxes here: Income Tax Rates 2024/25: All Changes Explained.
Our UK Tax Calculator also provides more information about working out tax liabilities for both the employed and self-employed.
Tax Relief Working from Home for Self-Employed
Normally, expenses must be incurred wholly and exclusively for the business. However, self-employed people who work remotely, whether sole traders or limited companies, can calculate a portion of their household expenses used for the business.
Allowable expenses for work-from-home self-employed individuals include but are not limited to the following:
- Mortgage interest or rent
- heating and electricity
- broadband bills
- council tax
- mobile phone bills
- magazine subscriptions
- contents insurance
It is best for self-employed people to seek tax experts’ advice when determining which allowable expenses to include in their tax returns. Other personal allowances are also available to reduce income-tax liabilities, including savings interest and dividend incomes.
Tax Relief FAQs
Employees working remotely in the UK are generally taxable on their employment income in the UK, though they may have reporting obligations in overseas countries without being taxed there.
In the UK, the first £1,000 of income from self-employment (the ‘trading allowance’) and the first £1,000 of rental income (unless using the Rent a Room Scheme) are tax-free.
There are many ways to reduce tax levies, such as maximising all eligible allowances. Taxpayers must seek guidance from tax professionals for effective tax-reducing strategies.
In the UK, expenditures for buying building premises are not tax-deductible. However, if they are related to repairing, maintaining, or altering business premises, they can be claimed as allowable expenses, especially if the business uses cash basis accounting.
Yes, rent for business premises is a deductible business expense in the UK. Businesses can also claim expenses for business rates, water rates, and utility bills.
Need More Advice? Legend Financial Can Help
Whether you are employed or self-employed, claiming your tax relief working from home can substantially help increase your take-home pay. However, determining which expenses to claim can be very tricky. Legend Financial is here to provide further guidance and support.
We have been helping hundreds of individuals and businesses for over ten years in their tax affairs, so you can be sure the ones handling your tax affairs are years-long pro! Talk to us today!
