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Property:
Working from home

If you work from home to any extent, you may be able to get tax relief on a proportion of your household expenses.

In its simplest form, if you are a �homeworker employee� � that is, by arrangement with your employer, you regularly carry out some or all of the duties of your employment at home � your employer may reimburse reasonable additional household expenses, up to �2 per week. Your employer may pay more if there is supporting evidence showing that the additional expenses exceed �2 per week.

Beyond that, it gets more complicated.

If you are an employee (including a company director), you will get tax relief only if working from home was necessary for the purposes of your employment. �Necessary� is interpreted narrowly. It does not mean that it suits you better, or saves you time. It normally involves a requirement by your employer that you work at home. That is quite normal for field-based representatives. For others, it may be harder to establish your entitlement.

If you are self-employed, whether as a sole trader or as a partner in a partnership, the rules are more relaxed. You can claim expenses only if and to the extent that they are wholly and exclusively for the purposes of your trade or profession. But you do not have to show that working form home is necessary. It may be simply a matter of how you choose to work.

If you are entitled to claim a proportion of household expenses, the calculation is not straightforward. Amongst factors to be taken into account are: the area or volume you use compared with the total, the time you spend working from home, who else is occupying the house when you are working there, and what area or volume they are occupying at the time. There may be different proportions for fixed costs, such as council tax, and for variable costs, such as heat and light.

Cassons can advise you whether you can claim, how much you can claim, and what records you must maintain in order to support your claim.

Working from home may also affect capital gains tax on a future sale of your home. Usually, any gain on the sale of your home is exempt from capital gains tax. Working from home does not necessarily change that. If you do some business paperwork on your dining table, the room is still your dining room and continues to be treated as part of your home. But if part of your home is used exclusively for business purposes then that part is not treated as being part of your home and a proportion of any gain may be subject to capital gains tax. Mixed business and domestic use of a room preserves entitlement to tax exemption; but HM Revenue & Customs ignores token domestic use of what is essentially a business room. On the other hand, if you reinvest the proceeds in a new property which also includes a business element, you may be able to defer the tax charge. Cassons can advise you about this.