CIOT confirmed that this advice is also applicable to contractors or freelancers who are employed by their own limited company. A CIOT spokesman said: "It also applies to directors who are employed by their own limited company. If you are an employee, including directors, and have an office at home your employer, in this case the limited company you own, can use the section 316A exemption to make tax free payments of homeworking expenses.”
The Institute noted existing HMRC guidelines that permit employers to pay their workers who regularly work from home under an agreed arrangement a tax-free payment to help cover costs associated with higher household bills, such as electricity and gas.
HMRC has confirmed that employers who require their employees to work from home as a result of the temporary closure of their business premises due to the Coronavirus would be able to provide the tax-free payment as a means of offsetting reasonable additional household expenses.
This payment increased to £6 per week – or £26 per month – from April 6 as a result of measures announced in the March Budget. It is usually paid to workers in addition to their salary.
It is up to an employer to decide whether to make the payment. If they don’t, employees may be able to claim tax relief from HMRC on the additional household costs of their home office, provided they keep records of these costs and can prove to HMRC that they were ‘wholly, exclusively and necessarily’ in the performance of their work.
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