There seems little doubt now that the working from home phenomenon has become established.
With a laptop, a phone and an internet connection, many tasks can be performed as adequately at home or elsewhere, as in an office.
While returning to the office is a must for many, the recent rail strikes and surge in fuel prices have shown that this kind of flexibility can keep the wheels of industry in the UK turning when businesses and their staff are disrupted.
Usually, this takes a hybrid form with a few days in the office and a couple working from home, or vice versa.
Although many businesses are already implementing this new way of working, there are things that business owners themselves should consider, especially where they intend to operate a business out of their home.
Get advice before taking the plunge
If you decide to run your business from home, some rules and regulations need to be followed.
- You may need permission from the local council, a landlord or a mortgage provider to run your business
- Health and safety issues will also have to be properly managed
- You may need separate insurance.
If you are planning on making alterations to accommodate your business, you may need permission from the council.
You may also need a licence if your business is likely to cause disruption with deliveries and visitors, or if you want to advertise outside your home.
What tax allowances can you claim?
You can include your business costs in your Self-Assessment tax return if you’re a sole trader or part of a business partnership and you can also claim a proportion of the cost of things like council tax, heating, lighting, phone calls and broadband.
Capital Gains Tax
You may have to pay this on the part of your property you used for your business if you sell your home in future, so be aware.
You may have to pay business rates on the part of your property that you use for your business, while you’ll still have to pay Council Tax on the rest of your property.
But you may qualify for small business rate relief if your property has a rateable value of £12,000 or less.
Supporting employees in their own homes
Many employees are also enjoying the benefits of WFH, either full-time or under a hybrid system.
As an employer, you must support them as well. For employees, the work-from-home relief, which many claimed during the pandemic, is still available.
However, from 6 April 2022 onwards it is only open to employees where an employer specifically requires a staff member to work from home – for example, to stop the spread of Covid or because the job had been ‘relocated’ and was now contractually regarded 100 per cent as a home-working role.
For basic-rate taxpayers, the relief is worth 20 per cent of the £6 allowance – £1.20 a week – while for higher-rate taxpayers they could claim 40 per cent of the £6 – £2.40 a week.
Over the year, this means that employees can reduce their tax bill by between £62.40 and £124.80 respectively.
For some employees, relief may also be available on:
- Reimbursement by employers for additional household expenses
- Provision of office equipment by employers
- Provision of computers for private use by employers
- Travel for necessary attendance.
If you need help and advice on managing your business as it makes further moves to work from home, please get in touch with us for advice.