The rules on expenses when working from home
With the landscape less clear on employee and employer rights, doctors in private practice will need to consider longer-term working arrangements for their employed and self-employed workers, writes Vanessa Sanders
The list of questions remaining unanswered is almost infinite:
- Can I insist my employees or workers are vaccinated?
- Do I want them to wear masks?
- Should I allow them to remain working at home?
- What are the insurance implications for employers’ liability?
- Can I force them to return to the office?
- What responsibility do I have for vulnerable staff?
- What, if anything, do I have to incorporate to implement social distancing at work?
Many employers or engagers are considering some form of hybrid working arrangements, whereby even if an individual works primarily from home, meetings will still have to be scheduled in a common place.
Home working during the pandemic may not have been strictly ‘necessary’ in the terms of contractual obligations, but if this is to be longer-term, then, as the employer, you will need to alter these employment contracts.
If you fail to do so, your employees may suffer unintended consequences such as tax on employer-provided items. To date, the Government and HM Revenue and Customs (HMRC) have taken a pragmatic approach to the need for home working, applying the fact that employers have been unable to provide space from which to work.
This makes the test of ‘wholly, exclusively and necessarily’ for the purposes of the employment implied when everyone was forced to retreat to the safety of their homes last year.
However, in future, the employee’s contract will need to designate their home as a place of work.
A home-working policy is helpful to ensure workers are aware of expectations and what happens if these are unmet.
In any employment tribunal, the first question is usually ‘what did the policy say’, because without a policy an employee cannot be expected to understand when they breach the rules. Implied terms and common sense to one person are not the same for another.
As an employer, you may wish to consider what can be paid for by your business to facilitate working away from the office.
Allowable household expenses
The simplest way of re-imbursement for an employee’s use of their home as an office is to use HMRC’s rates of £6 per week or £26 per month.
If this is not sufficient, then it is possible to re-imburse without tax consequences on the employee, but additional expense must be proven. Home-related expenses that are available are restricted to:
Equipment
Equipment can include computers, printers, scanners, furniture such as desks and chairs, stationery, spectacles, reasonable refreshments. Anything which you would normally provide in the office environment.
There should be a policy, however, which states there must only be insignificant personal use of any of these items.
Utilities
Additional expenses relating to utilities. Gas, electricity and water service costs can be apportioned on a reasonable basis; for example, number of rooms or floor area used for work and hours of work per month.
Phone
Phone call charges on a landline would need to be separately identifiable as business-related. It is easier now to provide a mobile which can be paid for direct by the business.
Internet connectivity
Most phone lines are now used to provide broadband and it is likely that workers who rely on the internet for business should consider dedicated lines for business, paid for by their employer either directly or by re-imbursement.
HMRC understands that if a line is required for business, then it is likely that the employer will pay for it and is unlikely therefore to accept claims for such an expense as wholly, exclusively and necessarily for the purposes of the employment unless the contract requires the employee to pay for them.
Any other costs relating to the provision of accommodation are not accepted by HMRC as deductible under its ‘wholly, exclusively and necessarily’ requirement.
Vanessa Sanders (right) is a partner with Stanbridge Associates, accountancy, finance and tax advisory medical specialists