Contractors' Questions: Can my company pay for home office fittings?

Contractor’s Question: I’m following the advice about kitting out my office as a limited company contractor, but want to know if my company can buy what might be deemed by HMRC as ‘decorative peripherals?’ I’m referring to items that do not seem 'wholly necessarily for business' but which I would want in the office such as a blind or curtains and light fittings. Can my company purchase these, as it has done with a desk and chair and will do with a second desk?

Expert’s Answer: Firstly, I assume that you are obliged to work from home on a contractual basis and that is for a significant amount of your working week? If this is the case, as you will be aware, you will entitled to claim the extra costs of heating and lighting the work place as well as business calls/broadband costs on a just and reasonable basis.

But HM Revenue & Customs will not accept any expenses such as rent or mortgage interest on your property as these costs would have been paid personally by yourself anyway and unfortunately this where we arrive at with your claim for blinds and the other items you mention.

If your office is a room in your residential property, previously used for personal use, then you are obliged to pay for these ‘decorative peripherals’ - and I would count blinds and curtains in this respect, as part and parcel of you running your own home. Similarly, light fittings are part of the basic structure of the room and are therefore deemed to be an improvement to the property and so would not receive tax relief.

If the decorative peripherals relate to a new room (extension or loft conversion) then the costs of the blind or fitting can be met by the company as refurbishment costs, as long as the room is used solely for business purposes i.e. you are preparing the room in readiness for working in - but no tax relief will be available as they are not necessary to the performance of your duties.

Conversely, your desk and chair is wholly, exclusively and necessarily for you to perform your business activities – if you require an additional desk which is necessary for your role, then this of course, attracts tax relief via capital allowances as office equipment.

One final point - if you are mainly a site-based contractor who spends a limited amount of time performing general administrative duties in your office on a voluntary basis, then your home working costs in reality will be minimal and we suggest that you claim the HMRC advised amount of £4 per week from your company.

The expert was Matt Fryer, head of compliance at contractor accountancy firm Brookson.

 

Monday 25th January 2016