Working from Home & Travelling Expenses – Tax Relief under Threat

Self-employed professionals who work from home and have other regular places of work need to be aware of a recent tax case which has cast doubt on what has, for many taxpayers, been a customary tax claim.

Regular Journeys Not Allowed!

Many taxpayers feel that if they have an office at home and perform meaningful work there, then travelling from home to another place of work should be tax-deductible, as it is effectively travel between two places of work. HM Revenue & Customs (HMRC) disagrees, and won a tribunal case earlier this year which concluded that journeys between the home office and another regular place of self-employed work such as a surgery are not allowable. Other journeys, such as emergency call-outs or occasional visits to clients or customers, should still be tax-allowable.

Was it a “Real” Home Office?

Yes – the tribunal judge was completely satisfied that the practitioner’s home was indeed an office and that “real” work was done there.

The judge nevertheless concluded that normal journeys to or from home had a private element which meant that they were not allowable for tax purposes.

What Should I Do?

This is a very disappointing outcome and we are pleased to note that, at the time of writing, the case is due to be appealed. The outcome will be awaited with great interest because of the implications for medical and other professionals – and  perhaps the majority of other self-employed individual who works from home.

For now, those who are potentially affected should make sure to record regular journeys both to and from their home office separately from ‘irregular’ business journeys which should still be tax-deductible.

If you feel strongly that the current decision is wrong, it may be appropriate to consider making a claim in your tax return for the full amount including regular journeys, as long as the basis of the claim is disclosed to HMRC.  It is open to a taxpayer to disagree with HMRC on the tax treatment of an expense – although we would always recommend that you discussed it with us first.

If you feel that this affects you get in touch with our Tax team or call 0161 249 5040