The guidance on this page applies for 2006/07 onwards. For
2005/06 and earlier years it was HMRC practice to include council
tax, and rent, in the expenses qualifying for relief. For detailed
guidance on the approach to be adopted for 2005/06 and earlier
years, see SE32810 onwards.
For 2006/07 onwards, the following expenses are not
deductible in any circumstances.
This is a flat rate charge which the employee has to pay irrespective of whether they work at home or not. No part of it is paid wholly and exclusively in the performance of their employment duties.
As for Council Tax.
Water rates are a flat charge. So no part of the charge can be said to be incurred exclusively for business use. Where a water meter is used, see EIM32815.
Mortgage interest is a cost of borrowing money and not a cost of providing business accommodation. The case of Baird v Williams (71TC390) confirms that it is not a deductible expense. For the same reason endowment premiums relating to the mortgage are not deductible.
No deduction is due for the cost of insuring the property or any of its contents. It is not a cost that is incurred in carrying out the duties of the employment. It is an expense to save a later potential expense.
