Complete Business Startup

Working from Home and Taxation

There are a number of practical points which require consideration when working from home including any taxation effects. Using a private residence or a part of it for business purposes might result in part of the person’s home being treated as business premises for taxation purposes.

Currently, when a person sells their principle private residence, the whole amount of any monetary gain is not subject to taxation.

When a person using their part of their home as an office, in relation to tax rules, that portion of the residence is not subject to the same exemption and therefore, on the sale of the property, might result in an assessment and tax charge being levied by Revenue and customs. See for further details.

Although working from home might lead to the above charge, a potential advantage is that whist the business is using the home for its operations; it can make a claim for equivalent to the cost which the residence bears in sustaining its activities.

The use of home as office charge is an estimated cost of the utilities, wear and tear and other services provided by the home to the business and are deductible from the year end accounts.

The estimated charge will generally be accepted by Revenue and Customs if it is one which can be deemed to be reasonable. The amount might be based on either simple or more detailed calculations which take in to account individual household bills and an apportionment allocated to business use.

An accountant or the Revenue and Customs themselves might be best placed to provide their agreement that any anticipated claim for use of home as office expenses.