Contractors' Questions: Is my home a workplace for expenses purposes?

Contractor’s Question: This Contractors’ Questions piece mentions “very restrictive” rules on claiming that your home is a workplace. Can you please elaborate on these restrictions?

And if I accept an IT contract where the work is specified to be home-based but I’m going to have to journey to a client or third party site on an irregular basis, surely travel expenses would be claimable as such journeys would be classed as travel between two work sites?

Expert’s Answer: From April 2016, if you are employed on an umbrella contract,  new rules dictate that if you travel from home to your main site of work and you are subject to Supervision, Direction or Control (SDC) by  your client, then travel costs are not allowable. This would also be the case if you were the director of a company caught by the IR35 rules.

One of the issues with working at home is that it is not purely a place of business, and journey costs between home and places of business do not normally receive tax relief.

If you spend most of your time working from home and are contractually obliged to do so, then this is your main worksite. Therefore, if you were contracted to work from home then travel expenses may be allowed if you are attending a temporary workplace.

However, a temporary workplace would need to be one where you are not subject to the SDC rules and assumes that your attendance at the client’s site is on an irregular basis and would represent less than 40% of your working week.

As noted above, you would expect travel costs to be limited in nature as you are contractually office-based as this is where the main body of your work is performed.

It is important that you demonstrate that any ad hoc travel costs are just that i.e. - you don’t perform a significant part of your duties at your client’s premises ( i.e. more than 40% of your time there), and that there is no regularity or pattern to your visits which could perhaps demonstrate that you have more than one permanent workplace.

For example, an IT consultant who works primarily from home and who is required to make regular monthly attendances at his client’s premises for monthly meetings would be unable to claim travel costs due to the habitual nature of attendance. But ad hoc unscheduled visits would meet the criteria. Therefore, each journey you undertake should be considered in the context of the SDC rules and whether the journeys are irregular and not a significant part of your working week.

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

Monday 21st March 2016