Working from home: what it means for your expenses
It’s been almost 4 weeks since the UK lockdown began on 23rd March, a day from which many of us found ourselves unexpectedly working from home – or WFH as it’s become commonly known! In the grand scheme of things, those of us who are able to work from the safety of our homes are extremely lucky. But you might find yourself a little out of pocket while you’re working at home all day…
Ranging from electricity and gas, to your telephone and internet bills – we wouldn’t be surprised if some of your personal costs start to rise. On the other hand, there are also elements you might no longer need to be spending, such as commuting costs.
Mazuma is breaking down some of the things you can do to be smart and efficient with your finances while WFH. You’re welcome!
Am I eligible for a tax rebate?
If you notice that your costs start to increase as a result of WFH, you may be able to claim a tax rebate. What you can claim for and how you submit your claim will vary depending on your employment status i.e. whether you are employed or self-employed.
If you’re employed
If you’re an employee working from home, yes – you should be able to claim for a tax rebate on some bills you pay in order to effectively do your job from home. But having said that, you’ll only be able to claim for things that solely relate to your work. For example:
- Gas and electricity used to power your work station
- Business calls
Things such as rent and broadband can’t be claimed for as they aren’t solely for business use. In other words, you’d be paying your rent whether you were working at home or not! But your phone bill may well increase if you’re using your personal phone more for work calls, so you can claim for some of it.
If you’re self-employed
If you’re self-employed and WFH, you’re the lucky ones! You’re able to claim for more than employed workers, including a proportion of the costs for the following:
- Mortgage interest
- Council tax
- Water rates
- General maintenance
Head over to our blog what home office expenses are tax deductible and how much you can claim for more information.
How much can I claim?
To calculate exactly what proportion you can claim, you need to work out the amount of time you spend working at home, and how much of your home is being used – this is particularly relevant for lighting and heating! If you’re working from home for more than 25 hours a week – which we assume will be most of you – you may be able to use HMRC’s simplified expenses system. The system is applicable to sole traders and business partnerships that have no companies as partners.
How to claim
Now onto the fun part – claiming your money!
If you’re self-employed, you are only able to claim via a self-assessment tax return, which you should be familiar with anyway! Your WFH expenses will subsequently be deducted from your profit and reduce the amount of tax you’ll pay.
You can find out more about allowable expenses while working from home on our other blog post – take a look!
Who can I contact for advice and support?
We know that this is a difficult time for those who are self employed, such as freelancers or sole traders, and that small businesses and startups will need all the support they can get throughout this uncertainty. If you need advice, HMRC has a dedicated tax helpline to support those who are concerned about making their tax payments due to the impact of coronavirus.
You can also head over to our blog with the latest information on government advice and guidelines for small businesses. We update this article regularly with new updates, so keep checking back to see what’s happening. And of course, you can get in touch with our team for advice and guidance.
Will working from home affect my home insurance?
It can do, yes. You might need to let your insurance provider know about your new WFH set up, which might involve adding additional cover for new items in the house. If you are employed, the equipment is likely to be covered by your employer, but it’s worth checking either way.
Can I change my car insurance?
If you’re no longer using your car to commute to and from work, contact your insurance provider to see if you can amend your policy from commuter use to casual use. This could reduce your insurance payments – win-win!
Work with Mazuma
Now might not seem like the time to be thinking about sorting your accounts, as there’s so much going on in the world right now. But someone still needs to keep on top of the finances – and that’s where we can help. Get in touch with the Mazuma team today to get a quote, and from just £28 per month plus VAT, we could take a weight off your shoulders.
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