Home working flat rate - rule change

[dmini]

Is it just me who wasn't aware of this?
BIM75010 - Simplified expenses: use of home for business purposes
Can any of the accountants give a background on when we lost the £4/week flat rate? I missed this one

[Kenny@MyAccountantFriend]

They are the rules for self employed not employees.

https://www.gov.uk/tax-relief-for-em...orking-at-home

Use his link instead

[dmini]

OK - so as directors which do we count as? We are not technically employees or self employed.
Our accountant (who I am not totally impressed with) has told us they will not pass any new accounts without hours all being logged and on the "self employed" system - which has been around for years apparently. Now checking what notice we have to give our accountant.....

[jamesbrown]

OK - so as directors which do we count as? We are not technically employees or self employed.
Our accountant (who I am not totally impressed with) has told us they will not pass any new accounts without hours all being logged and on the "self employed" system - which has been around for years apparently. Now checking what notice we have to give our accountant.....

The answer is definitive; these rules do not apply to company directors. You have a couple of options but, as someone that is 100% WFH, I suggest that the standard allowance of 18pm is the best you'll do (you can trade some extra hassle with apportionment for somewhat higher tax relief, but we're talking about a very marginal amount, annually, for someone on a decent day rate).

[dmini]

[QUOTE=jamesbrown;2215490]The answer is definitive; these rules do not apply to company directors. QUOTE]
Which rules dont apply in your view - the £4/week employee rate or the graduated 0/10/18/25 per month rates for self employed?

[jamesbrown]

Which rules dont apply in your view - the £4/week employee rate or the graduated 0/10/18/25 per month rates for self employed?

The £4 per week (£18 per month is better ) is perfectly fine. The simplified (higher) flat rates are not for company directors.

[TheCyclingProgrammer]

As people have pointed out, the BIM manual applies to businesses (both incorporated and sole traders) and some of those pages are specifically for the self employed.

The EIM manual applies to employees and company officers.

You can claim:

* All ADDITIONAL costs incurred as a result of working from home. This could be additional utility costs for example, but not a proportion of any fixed costs due to them having duality of purpose. You are required to keep evidence of how you calculated these additional costs. OR

* A flat rate of £4/week to cover your additional costs, with no further evidence required. OR

* A more complicated setup where you form a rental agreement with YourCo, calculate a proportion of all your costs, including certain fixed costs (essentially anything that can be used to offset rental income) and charge YourCo this much in rent. The rental agreement needs to be non exclusive to avoid potential CGT issues on your home when you sell it. You need to declare the rental income on your tax return and claim the relevant costs to make it tax neutral.

Most people opt for the middle option I think but depending on your circumstances, costs and how much you work from home the other options may be worth discussing with your accountant (especially the last one which needs to be done carefully to avoid paying unnecessary tax).