If you’re a limited company director claiming the £312 working from home tax relief (that’s £6 per week), there’s an important change you need to know about. HMRC has tightened up their rules, and it could affect your claim.
What’s Changed?
From 14 October 2024, HMRC will only accept claims for the £312 flat rate working from home allowance if you have written evidence that you’re contractually required to work from home.
This is quite a shift from how things worked before. Previously, many directors and employees could claim this relief on a more informal or discretionary basis. Now, HMRC wants to see proper documentation that proves working from home isn’t just a choice, but a requirement.
What Does This Mean for You?
If you’re a limited company director working from home, you’ll need to make sure you have one of these in place:
- A clause in your service agreement stating you must work from home
- A formal board resolution requiring home working
- Written documentation that shows working from home is a condition of your role
Without this written evidence, your claim won’t be valid.
Sample Wording to Keep You Compliant
Don’t worry, we’ve got you covered. Here are two examples you can use to make sure you’re meeting HMRC’s requirements:
Option 1: Home working Clause for Service Agreement
“The Company requires the Director to work from their home address at [insert address] for a minimum of [insert number] days per week. This arrangement is a condition of employment and is necessary for the proper performance of the Director’s duties. The Director’s home is deemed an official workplace for the purposes of fulfilling their role and responsibilities. The Company will review this arrangement annually, but it will remain in place unless varied in writing by mutual agreement. The Director must ensure that their home working environment is suitable for conducting business and agrees to be available and contactable during normal business hours on home working days.”
Option 2: Board Resolution
“At a meeting of the Board of Directors held on [insert date], it was resolved that [Name of Director] is contractually required to work from home at least [insert number] days per week as part of their duties for the Company, with effect from [insert date]. This resolution is to be retained with the Company’s records as evidence of the homeworking requirement.”
What If Your Costs Are Higher Than £312?
If your actual home working costs exceed the £6 per week flat rate, you might be able to claim more. However, you’ll need:
- Detailed records of your actual expenses
- Evidence showing the business use portion of your home
- Receipts and documentation for all costs claimed
This route requires much more paperwork, so most people stick with the simpler flat rate option.
What You Need to Do Now
If you currently claim the flat rate and don’t have the proper documentation in place:
- Review your current arrangements – Do you have written evidence of your home working requirement?
- Update your documentation – Add the appropriate clause to your service agreement or pass a board resolution
- Keep proper records – Make sure all documentation is filed safely with your company records
- Get in touch with us – We can help you set up the right documentation and ensure your claims are compliant
This change affects anyone claiming the working from home allowance, so it’s worth getting sorted sooner rather than later. The last thing you want is HMRC questioning your claim because you don’t have the right paperwork.
Need More Help with Business Expenses?
Working from home costs are just one type of business expense you can claim. There are many other legitimate expenses that could help reduce your tax bill. Download our comprehensive expenses guide to discover what else you might be able to claim and how to keep the right records.
Need help implementing these changes or want to review your current home working arrangements? Get in touch with us at hello@pinkpigfinancials.co.uk or book a call from our Get Started page. We’re here to make sure you stay compliant while claiming everything you’re entitled to.
