SE32815 - Other expenses: home: household expenses: expenses that are deductible

This guidance only applies:

• where an employee's home is a workplace, see SE32760
• for years up to and including 2005/06. For 2006/07 onwards, see EIM32815.

The following expenses are deductible when a room in the employee's home is set aside exclusively for business use. For the amount of the deduction, see SE32825.

Gas/Electricity

If the room is to be used for work it must be lit and heated to the extent necessary to carry out the work.

Cleaning

If the room is to be used for work it must be kept in a fit state for the work to be carried out. Unless a cleaner is employed there is unlikely to be any significant expense exclusively incurred in cleaning the room.

Council tax/rates

A room set aside exclusively for business contributes to the value of the house. Therefore a deduction can be given for a proportion of Council Tax, or the rates in Northern Ireland (but not water rates, see SE32820).

Rent

If the property is rented the amount of the rent reflects the existence of the room that is used exclusively for business. Therefore a deduction can be permitted for a proportion of the rent paid.

Telephone

The cost of business telephone calls made from home is deductible whether or not any part of the home is set aside exclusively for business use, see SE32940.

Water charges (metered)

If the water supply is metered then it is theoretically possible to calculate the cost of any water used wholly and exclusively for business purposes. Remember though that the expenditure also has to satisfy the “in the performance of the duties” test (see SE31650). What we are primarily concerned with here are people who use a room or rooms in their house as an office. The amount of water used in actually performing office related duties is likely to be nil. We accept that the room(s) have to be kept clean, but the costs of doing so are likely to be small (see above). The cost of an occasional bucket of water for cleaning purposes will not change that.

As regards water rates, see SE32820.