Claiming Tax Expenses for Remote Working

Working from home has settled into a routine for a lot of people, but the tax position is still muddier than it needs to be. The good news is that you may be able to claim relief on some of the extra costs you're carrying. The less good news is that the rules differ depending on whether you're employed or self-employed, and the amounts involved are often smaller than people hope. Getting it right is straightforward once you know which bucket you fall into.

Who Can Claim, and What Counts as an Allowable Cost

The principle running through both employed and self-employed claims is that you can only get relief for costs that are genuinely tied to your work. For employees, expenses must be wholly, exclusively and necessarily incurred as part of the job — a fairly stiff test. For the self-employed, the bar is wholly and exclusively for the purposes of the trade, which is more forgiving but still means no claiming for anything with a personal benefit built in.

Two practical consequences follow. First, if your employer has already reimbursed a cost, you cannot claim it again — that would leave you with relief on money you never spent. Second, a claim reduces your taxable income rather than being a pound-for-pound handout. For a basic rate taxpayer, £100 of allowable expenses saves £20 in tax; a higher rate taxpayer saves £40. It's real money, but it isn't a rebate cheque for the full amount.

Equipment and Hardware: Buy It the Right Way

Laptops, monitors, a decent ergonomic chair, a printer — these are the things people ask about most. There's a neat way to handle them and a messy way.

• Employed and the employer buys it: no problem, no tax charge, and the equipment should be returned when you leave.
• Employed and you buy it: harder. You generally need to have been required to buy it and to bear the cost yourself, and only the work proportion is allowable. Buying your own laptop when you weren't asked to is unlikely to fly.
• Self-employed: much simpler. Equipment used in the business is an allowable expense. Low-value items within the annual investment allowance go in as a normal cost, and the allowance covers most kit a sole trader will ever buy.

Keep the receipt or invoice whatever you do. A bank statement showing "£349.99" tells an inspector nothing about what you bought.

Broadband, Heating and the Rest of the Bills

Household bills are where claims go wrong most often. The rule is that you can claim the additional cost of working from home, not a slice of bills you'd have paid anyway.

Broadband is the classic example. If you had a decent connection before you started working remotely, the line rental isn't an extra cost, so there's nothing to claim on that element. What you can look at is a reasonable business share of usage upgrades — a faster package you only took out because of work, say. Heating, lighting and water are more defensible: a modest apportionment based on the proportion of the home used for work and the hours you spend there is usually accepted.

What you can't claim is your council tax, your mortgage interest (unless you're self-employed and using the simplified rules for a business premises, which don't apply to a spare bedroom), or your whole energy bill because you happened to answer emails at the kitchen table.

The £6 a Week Flat Rate for Employees

If you're employed and required to work from home — whether fully remote or on a hybrid pattern — you can claim tax relief on £6 a week without providing any evidence of your actual costs. That's £312 a year, worth £62.40 to a basic rate taxpayer and £124.80 at 40 per cent.

Alternatively, your employer can pay you £6 a week tax-free as a homeworking allowance, which is often cleaner than claiming relief later. You can also claim the higher of the flat rate or your actual additional costs if you have the paperwork to prove them, though for most people the flat rate wins on simplicity. Claims can usually be backdated for up to four previous tax years, so it's worth checking what you've missed.

Simplified Expenses If You Are Self-Employed

Sole traders and partners have a different toolkit. Rather than totting up bills, you can use simplified expenses, which set a flat monthly amount based on the hours you work from home:

• 25 to 50 hours a month: £10
• 51 to 100 hours a month: £18
• 101 hours or more: £26

It's not generous, but it takes minutes and removes the argument about apportionment. The alternative is to work out actual costs and claim a reasonable business percentage — which often produces a bigger figure if you have a dedicated office and high energy bills, but requires records to back it up. You can't mix and match: pick one method and stick with it for the year.

Keep Records and Watch the Common Pitfalls

Whatever you claim, the burden of proof sits with you. Keep receipts, invoices and a simple note of how you arrived at any apportionment — "40 per cent of broadband, business use only" with the workings behind it is far better than a figure plucked from the air. Employees generally claim through a P87 form, while the self-employed include expenses on their Self Assessment return.

• Don't claim the same cost twice — once through your employer and once on a return.
• Don't inflate the business proportion of a shared room or a family broadband package.
• Do keep records for at least six years in case questions come later.

If your situation is unusual — a company director with a dedicated home office, or someone splitting time across two homes — it's worth a conversation with an accountant before you file. For everyone else, the rules are forgiving enough that a careful, modest, well-documented claim is almost always the right call.