Modern technology allows increasing numbers of employees to carry out some or all of the duties of their employment in their own homes. Where we accept that an employee's home is a workplace we can permit a deduction from earnings:
This page and the pages that follow contain guidance on how to
decide whether an employee's home is a workplace and, if it is,
what expenses can be deducted.
Before a deduction can be permitted for a household expense it must be demonstrated that the expense has been incurred wholly, exclusively and necessarily in the performance of the duties of the employment, see EIM31630 and EIM31660. Those are the statutory conditions imposed by Section 336 ITEPA 2003. HMRC accept that those conditions are met where the following circumstances apply:
The examples in
EIM32790 illustrate how those conditions
will apply in a range of different circumstances.
If one or more of those conditions is not met it is likely that the employee will not satisfy the statutory tests in Section 336. However, employees do of course have the right to appeal to the First –tier Tribunal if they believe that they satisfy the statutory conditions. Any case where agreement cannot be reached can be brought before the First-tier Tribunal as described in EIM31706.
(This text has been withheld because of exemptions in the Freedom of Information Act 2000)
The deduction for an employee’s homeworking expenses under Section 336 should not be confused with the exemption under Section 316A which applies to certain homeworking payments that employers may make, see EIM01472 onwards. The interaction between the deduction and the exemption is explained at EIM32825.