If you are providing homeworking expenses to your employees, it could be exempt from tax and reporting in qualifying conditions and the homeworking expenses cannot be part of a salary sacrifice arrangement. There are two categories of homeworking expenses that we will cover.
Equipment, services, or supplies
Equipment, services, or supplies may include for example computers, office furniture, internet access, pens, and paper. If you provide equipment, services, and supplies to an employee who works from home, the expenses are exempt if they are only used for business purposes, or any private use is insignificant.
Additional household expenses
Additional household expenses, such as gas or electricity charges, for employees who need to work from home could be exempt as long as all the following apply
- they need to work from home, either because the equipment they need is not available at your workplace, or their work means they have to live too far away from your workplace to travel there every day
- the amount you give them is not more than their additional household expenses
- the amount you give them is not more than the current weekly limit of £6.00 per week (or £26 a month for employees paid monthly)
In the UK there are three VAT rates:
You can generally reclaim the VAT paid on goods and services for your business. If a purchase is also for personal or private use you can only reclaim the business proportion of the VAT (such as reclaiming VAT on fuel costs).