Some good news from the tax office. New guidance from HM Revenue & Customs will allow those working from home to claim more household expenses against their income “than they might ever have contemplated”, says Nicola Ross Martin, author of the Practical Tax Guide.
These include mortgage interest, council tax and even phone line rental. Advisers had feared that claiming these bills might result in a capital gains tax charge when the home was sold. But as long as certain conditions are met relating to the use of home space for work, this is not a problem. Indeed, says Angela Beech, tax partner at Blick Rothenburg, the tax office has confirmed that the expenses listed in the new guidance have always been tax-deductible, so some self-employed people could be able to submit a backdated claim for up to the last six years.
Each expence should be apportioned according to business and non-business use. HMRC suggests using three criteria – how much of the home is used for work; how much is an asset used during work hours; and for how long. So an office used regularly for business that takes up 5% of the total floor area of a house, could lead to a claim for 5% of the home’s annual council tax bill.