Can You Write Office Furniture As a Business Expense?
Everything you need to know about furniture expenses at home.
Working from home is becoming more and more common in the light of COVID-19. With an increasingly large number of employers allowing their staff to work from home, many people have been thrown into setting up an impromptu office space.
With the high costs associated with office furniture, lots of people who are working from home or are self employed are wondering how they can work productively without losing out.
Can you get a tax deduction on home office supplies?
With millions of workers across the UK needing to work from home, HMRC is allowing people to claim tax relief for supplies towards office equipment. And while the surge of home-workers might be new, the entitlement provided by HMRC has been in place for some time.
Printers, desks, chairs and many more expenses are listed as expenses by HMRC, giving people potentially large savings in tax relief. We’ll go into more detail on the ins and outs of what items you can claim down below.
What items can you claim?
Eligible items for claim must be categorised as necessary purchases that help you to do your work from home. This can affect a wide number of items, including electronic devices like printers, scanners, computers, as well as smaller purchases like bits of stationery and even printer ink cartridges.
You can also claim for tax relief on money spent towards office furniture. Of course, these furnishings must be used to facilitate your work, so are limited to pieces like desks, office chairs, and storage solutions.
If you are self-employed you can claim expenses on more things such as rent and broadband relative to how often you use ‘work rooms’ in your home. If you’re employed but working from home, you can’t make the same kind of claims on your household bills.
What items will HMRC not let you claim?
There is no guaranteed list of items that will or will not be approved by HMRC, however purchases made for items that are unrelated to your work will not be accepted. All purchases made for personal items do not count. This includes
HMRC will reject claims for items you use in your private life, as well as for work, such as clothing, broadband or rent (however, if you are self-employed you can claim the last two).
On his website, money-saving and consumer expert Martin Lewis explains how those working from home can save on their tax payments:
“...instead you can, in simple terms, claim a rate of £6 a week. There are two ways to do this:
Employers can pay you £6 a week extra tax-free. Employers can give you an allowance up to this amount and what they give you is free from tax, so you get it all (to give you more, it will need to make special arrangements).
Claim tax relief on £6 a week. If your employer won't pay expenses for your extra costs due to necessary working from home, but you have them, then you can ask for the amount to be deducted from your taxable income”.
How to make a claim to HMRC
If you’re employed and working from home, you can make a claim to HMRC by using a P87 form. You can download the P87 form from the HMRC website.
Once you’ve filled the document in with your personal details, you can submit it a couple of ways:
- Through the Government Gateway account portal
- Via post in an envelope
For P87 forms you aren’t required to attach receipts or proof of purchases with your submission. However, it’s a good idea to have records of your purchases in case HMRC inquires about your P87 form.
Martin Lewis gives the following advice to workers from home looking to save on their work-related costs:
"You'll be asked for your employer's name and PAYE reference (which you can find on your payslip or P60), and your job title.”
"For postal P87s, you'll also need your national insurance number."
If you choose to submit your form through the online portal, the simplest way to claim money is to add £6 per week you have worked from home. This can be filled into the section that asks how much you have paid. Similarly, you will need to submit £0 as the amount your employer has increased your wages to cover your expenses.
If you’d rather go the old fashioned way with a postal form, you will need to submit your expense amount in the section named “using your home as an office” section found in the “other expenses” part of the form.
Those who submit their form online are likely to hear back sooner than those who submit via post. That said, HMRC may see a lot of submissions, which might affect their speed of returns.
How do self-employed people claim for a reduction?
Self-employed workers can add their expenses to their annual self-assessment that is filled out at the end of each tax year.
What amount of tax relief will I get?
The amount of relief you will receive is based on the income tax rate that you are on.
To explain, those who pay 20% income tax on their annual income would receive 20% of the total claim amount. For example, if you were to claim £2,000 on a 20% tax rate, you would get £400 reduction.
Discussing the options available to workers, Martin Lewis says that "Your employer is allowed to pay you £6 a month tax free if forced to work from home."
Any claims for a larger amount of money will require the submission of a tax return, and like standard tax returns, will require evidence and proof of purchases and expenditures.
"To make the process easy, HMRC says that claims in line with the employers' payment (ie, for £6 a week) will not need to justify that figure – meaning you won't need to keep receipts or prove information."
"The impact of a £6 a week claim is the tax savings, that's a gain of £1.20 a week (about £62 a year) for basic 20 per cent rate taxpayers, and £2.40 a week (about £124 a year) for higher 40% rate taxpayers."
How long will it take for HMRC to process my claim?
It is likely that HMRC will receive an unprecedented amount of claims this year. While these expenditure claims are not new, potentially millions of people could be making claims for the first time.
In a piece published by The Times, Nimesh Shah—a partner at Blick Rothenberg—said the following of the predicted avalanche of applications: “Because a large number of people have been forced to work from home during the lockdown, HMRC will be inundated with claims for home working expenses.”
Depending on whether your submission is successful, you’ll receive your relief either through a cheque in the post, or a change to your tax code.
If you are working from home and would like to claim work expenses from HMRC, use the following link to get started: https://www.gov.uk/guidance/claim-income-tax-relief-for-your-employment-expenses-p87