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Working from Home?

Over recent years, it has become increasingly popular for employers to allow their employees to work from home, and in doing so, pay an amount to cover any additional household costs incurred. But what are the tax implications of such expenses for Directors working for their own company?

HMRC have stated that they will accept that homeworking arrangements exist where:

  • there are arrangements between the employer and the employee; and
  • the employee works at home regularly under those arrangements.

Amount of exemption

To minimise the need for record-keeping, employers can pay up to £4 per week (£208 per year) without supporting evidence of the costs the employee has incurred. If an employer pays more than that amount, the exemption will still be available but the employer must provide supporting evidence that the payment is wholly in respect of additional household expenses incurred by the employee in carrying out his duties at home.

Directors are employees: though not referred to specifically in the guidelines, they seem to be covered by these principles. Call us if you need any help with this subject.

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