Tax implication for working from home

[rabindra_pandey@hotm]

Hi, I am working for a multination company. We have got option of working from home. I want to know what are the tax implication for me if I opt to work from home. Do I have to pay more tax?

[Nigel Lord]

Rabindra

There are a number of issues that you should consider.

Firstly, what is you employment/self-employment status? If you are to be deemed self-employed, you will certainly have plenty of opportunity to pay less tax and national insurance, but your employment rights and entitlement to state benefits may be reduced.

If you have the opportunity to be self-employed, you will also need to establish whether it is advantageous to establish a limited company through which to trade. However, as you will probably only have one client, the IR35 provisions are likely to come into effect. This would reduce the advantage considerably.

If you are to be an employee you should consider the following:

1. If you are travelling on business, you may claim travelling expenses from your normal place of work (i.e. your home) so even trips to your employer's HQ would be tax relievable.

2. You will be able to claim certain household expenses incurred wholly, exclusively and necessarily in the course of your employment. Thse could include the costs of maintaining an office, telephone calls etc.

3. You will be able to claim capital allowances on any plant and machinery (e.g IT equipment) or fixtures and fittings.

4. You will need to establish whether expenses for the above items are claimed from your employer, or tax relief is claimed directly from the Inland Revenue.

Your employer will probably be able to answer many of the above queries.

If you require any further assistance please do not hesitate to contact us, and we will be happy to act on your behalf.

Nigel Lord
Lord Associates
Taxation & Business Consultants
Caxton House
Old Station Road
Loughton
Essex, IG10 4PE
020 8418 9101 & 07769 931852
mail@lordassociates.co.uk