£26/month to cover additional household expenses
Discussion
We're currently paying £26/month as permitted by HMRC for additional household expensed to those working from home but that seems like a very small amount for those working 100% from home, especially as they have a dedicated work space which in some cases, they only have as it's a requirement for them to be able to work for us.
HMRC say that you can pay reasonable expenses for the additional costs incurred such as heating or lighting but you should keep records of those additional costs. What records do they expect us to keep?
As an example, one employee lives in a 4 bed house, one of those rooms he uses as our office and store room. Even the office furniture is our furniture which he must return if he leaves us.
He's paying about £600/month for heating and council tax although in fairness, his council tax would be the same whether he worked for us or not, although he did buy a 4 bed rather than 3 bed to meet the requirement to work from home.
His heating and lighting wouldn't be much different but his heating in the entire house is on during the working day when it might not be if he wasn't working from home.
£26/month doesn't seem enough but I'm not sure how we calculate and qualify what we should be paying him.
He's worked like this for over 3 years so not sure if we make a change now, whether we should be paying for the time before the change.
HMRC say that you can pay reasonable expenses for the additional costs incurred such as heating or lighting but you should keep records of those additional costs. What records do they expect us to keep?
As an example, one employee lives in a 4 bed house, one of those rooms he uses as our office and store room. Even the office furniture is our furniture which he must return if he leaves us.
He's paying about £600/month for heating and council tax although in fairness, his council tax would be the same whether he worked for us or not, although he did buy a 4 bed rather than 3 bed to meet the requirement to work from home.
His heating and lighting wouldn't be much different but his heating in the entire house is on during the working day when it might not be if he wasn't working from home.
£26/month doesn't seem enough but I'm not sure how we calculate and qualify what we should be paying him.
He's worked like this for over 3 years so not sure if we make a change now, whether we should be paying for the time before the change.
HMRC guidelines are £6 per week.
https://www.gov.uk/tax-relief-for-employees/workin...
There is a £26 HMRC guideline but that only applies to sole traders and business partnerships:
https://www.gov.uk/simpler-income-tax-simplified-e...
You seem to have quite an arbitrary rule about number of bedrooms and permission to work from home.
Depending on the size of the household, one bedroom may be enough to provide space to work from home or 10 might not be! This rule could also discriminate against younger or lower paid employees or those who live in more expensive parts of the country.
Council tax shouldn't come into it. Your employee has to pay it regardless. I suspect this is where you're caught out by your 4 bedroom rule.
If your employee has a higher heating bill from working form home is this not offset by a reduction in travel time and costs? If now, you could just pay them a bit more- either as part of their salary or a bonus.
The basic principle is that of course there is personal use of the things you're claiming as business-only expenses, and it's far too complicated to manage the implications of that so lets compromise on a figure where you won't be subject to a massive load of hassle, but you can't get the tax too far wrong either.
If you go that route, what is your employee going to do about the Capital Gains Tax implications of the exclusive business use of part of their house for example? They're not even going to consider it are they? There may be Council Tax implications too and they may be breaching the terms of their mortgage or insurance if part of the premises *is* business, rather than house being used for work.
There's case-law on private use of cars for example that was decided on the principle that there was personal use because the employee would, obviously, use the car to get someone to hospital in an emergency if it was the only vehicle available. Benefit has a very far-reaching definition in that it encompasses circumstances that might happen as well as those that do.
The evidence bar to prove non-personal use is very high, so generally this is a sensible compromise given the money involved, the wide range of things that end up being done wrong and the level of record keeping required to prove you've done things right.
If you go that route, what is your employee going to do about the Capital Gains Tax implications of the exclusive business use of part of their house for example? They're not even going to consider it are they? There may be Council Tax implications too and they may be breaching the terms of their mortgage or insurance if part of the premises *is* business, rather than house being used for work.
There's case-law on private use of cars for example that was decided on the principle that there was personal use because the employee would, obviously, use the car to get someone to hospital in an emergency if it was the only vehicle available. Benefit has a very far-reaching definition in that it encompasses circumstances that might happen as well as those that do.
The evidence bar to prove non-personal use is very high, so generally this is a sensible compromise given the money involved, the wide range of things that end up being done wrong and the level of record keeping required to prove you've done things right.
GuigiaroBertone said:
Depending on the size of the household, one bedroom may be enough to provide space to work from home or 10 might not be! This rule could also discriminate against younger or lower paid employees or those who live in more expensive parts of the country.
Council tax shouldn't come into it. Your employee has to pay it regardless. I suspect this is where you're caught out by your 4 bedroom rule.
If your employee has a higher heating bill from working form home is this not offset by a reduction in travel time and costs? If now, you could just pay them a bit more- either as part of their salary or a bonus.
Or are could/should he be paying him more because that's one less desk space that needs to be funded have to find in an office?Council tax shouldn't come into it. Your employee has to pay it regardless. I suspect this is where you're caught out by your 4 bedroom rule.
If your employee has a higher heating bill from working form home is this not offset by a reduction in travel time and costs? If now, you could just pay them a bit more- either as part of their salary or a bonus.
It's an absolutely minefield where you can trade tit-for-tat arguments in both directions until someone gets bored or you fall out.
Tbh, since the days when the need for a dedicated office phone line ceased to exist, both sides win and lose in various ways when it comes from the economics of working from home. I've always taken the view that any costs associated from working from home need to be priced in to the salary and there's no further discussion needed, otherwise you find yourself arguing with employees about £20/mth or chancers who think you should be paying 25% of all of their bills.
How much is the employee saving on travel?
I work mostly from home now, and I don’t get any additional money for it. However, I’m saving £300+ per month on travel costs, so I’m not complaining!
I understand that you don’t want your employees to be out of pocket while WFH, but - are they?
I work mostly from home now, and I don’t get any additional money for it. However, I’m saving £300+ per month on travel costs, so I’m not complaining!
I understand that you don’t want your employees to be out of pocket while WFH, but - are they?
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