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LEGAL & FINANCE: Working from home in tax shake-up.

New tax rules mean a shake-up for homeworkers.

The tax relief homeworkers are allowed to claim on sums not reimbursed by their employers have changed.

Now chartered accountants Clement Keys are advising employers and their staff to make sure they update themselves about the revisions.

"HM Revenue and Customs has issued new guidance about expenses staff incur while working at home that are not reimbursed by employers," said personal tax partner Shona Cutler.

"Homeworkers must now comply with a set of rules in order for certain household expenses to be claimed as a deduction from their income for tax purposes."

Jobs performed at home must be "substantive duties" of employment - ones workers are required to carry out and which represent all or at least part of their core role.

It must also be the case that these duties cannot be performed without the use of appropriate facilities and that these facilities are either unavailable at the employer's base or the nature of the job is such that the employee has to live so far away from the premises concerned that it is unreasonable to expect him or her to travel on a daily basis.

Finally, at no time, either before or after a contract of employment is drawn up, should the employee be in a position to choose between working at the employer's premises or elsewhere.

HM Revenue and Customs has also revised its views concerning the type of expenses it will accept as "wholly and exclusively" incurred in relation to a homeworker's job and those that do not have an "identifiable part" are ruled out. As a consequence, council tax and rent have been added to the list of non-deductible expenses.

Mrs Cutler advises employees who work from home to check how they will be affected and ensure that they are only claiming relief for allowable expenses on their tax returns.

"Surprisingly the amounts an employer can pay to an employee for reimbursement of home working expenses have not altered so it may be worth speaking to your employer to obtain an allowance for home working."
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Title Annotation:Business
Publication:The Birmingham Post (England)
Date:May 5, 2006
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