EIM32760 - Other expenses: home: working from home

Section 336 ITEPA 2003

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:

• under Section 336 ITEPA 2003 for household expenses, see EIM32810
• in a few cases, under Section 337 ITEPA 2003 for the cost of travel from home to another workplace, see EIM32370. See also EIM31330 for travel in the employee’s own vehicle.

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 duties that the employee performs at home are substantive duties of the employment. “Substantive duties” are duties that an employee has to carry out and that represent all or part of the central duties of the employment (see EIM32780)
• those duties cannot be performed without the use of appropriate facilities
• no such appropriate facilities are available to the employee on the employer’s premises (or the nature of the job requires the employee to live so far from the employer’s premises that it is unreasonable to expect him or her to travel to those premises on a daily basis)
• at no time either before or after the employment contract is drawn up is the employee able to choose between working at the employer’s premises or elsewhere.

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 Commissioners if they believe that they satisfy the statutory conditions. Any case where agreement cannot be reached can be brought before the Commissioners as described in EIM31706.

(This text has been withheld because of exemptions in the Freedom of Information Act 2000)

Relationship with exempt homeworking payments

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.