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Where Taxpayers and Advisers Meet

Is renting an office tax deductible for a PAYE employee

G_S_aujla
Posts: 1
Joined: Mon Jul 22, 2019 11:06 pm

Is renting an office tax deductible for a PAYE employee

Postby G_S_aujla » Mon Jul 22, 2019 11:15 pm

Hi

In short my question is, if I rent an office for myself is this tax deductible? I know for sole traders it is but I am an employees and on PAYE.

Some background. Company I work for closed it’s offices (acquired). New offices are now 90 miles away. I was asked to work from home (field based contract). My home doesn’t really have the space for a home office.

I was looking into renting an office nearby for £200 a month. Can I deduct this from my taxes as a business expense?

Thanks in advance
Gurpreet

Jerome_Lane
Posts: 16
Joined: Mon Jul 22, 2019 10:13 am
Location: Camberley, Surrey
Contact:

Re: Is renting an office tax deductible for a PAYE employee

Postby Jerome_Lane » Wed Jul 24, 2019 2:15 pm

HMRC could challenge such arrangements as your contract is more likely to be to work from home. The fuel saving might cover the office costs and the view could be taken that it suits your life more than the employers. If your contract doesn't stipulate a place of work other than their office, then you are likely to be stuck. The easiest thing to do is get your employer to meet the cost as you'd still be doing yourself out of pocket compared to anyone else doing the same role (ignoring travel costs). It is likely to boil down to the detail in the employment contract as to whether the expense could be seen as an allowable cost. I wouldn't be 100% sure of success if a claim in my tax return was challenged by HMRC. As stated, it's best to get the employer to pay for the office space and avoid the issue.
Jerome Lane
Tax Advisor
jerome.lane@stewartco.co.uk
Stewart&Co.
Chartered Accountants
Telephone: 01276 61203

SteLacca
Posts: 446
Joined: Fri Aug 07, 2015 2:17 pm

Re: Is renting an office tax deductible for a PAYE employee

Postby SteLacca » Wed Jul 24, 2019 3:14 pm

The legislation requires that, for an expense incurred by an employee to be allowable it must be incurred "wholly, exclusively and necessarily in the performance of your duties". Since you are not required to rent an office then necessary test is not met.

bd6759
Posts: 3107
Joined: Sat Feb 01, 2014 3:26 pm

Re: Is renting an office tax deductible for a PAYE employee

Postby bd6759 » Wed Jul 24, 2019 11:12 pm

The contract has little to do with it. The duties of the employment do require the expense. It is not one that each and every holder of that employment would need to incur, therefore it is not allowable.

SteLacca
Posts: 446
Joined: Fri Aug 07, 2015 2:17 pm

Re: Is renting an office tax deductible for a PAYE employee

Postby SteLacca » Thu Jul 25, 2019 3:18 pm

The duties of the employment do require the expense.
How do you reach that conclusion. The job is home based as stated in the original post. The expectation is, therefore, that the employee frees up sufficient space at home to accommodate this.

The expense would be incurred either:

Because the employee is unable to or unwilling to free up space
To enable the employee to live 90 miles away from offices made available

Neither of these makes the expense incurred in the performance of his/her duties.

bd6759
Posts: 3107
Joined: Sat Feb 01, 2014 3:26 pm

Re: Is renting an office tax deductible for a PAYE employee

Postby bd6759 » Fri Jul 26, 2019 10:42 pm

Apologise for my shortcomings. I meant to type "do not", which makes my next sentence more coherent.


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