HMRC internal manual

Employment Income Manual

EIM01474 - Employment income: household expenses: what costs can be reimbursed?

Section 316A ITEPA 2003

Exempt payments can be made to meet or reimburse reasonable additional household expenses that an employee incurs in carrying out the duties of the employment at home under homeworking arrangements (see EIM01472).

Typically this will include the additional costs of heating and lighting the work area or the metered cost of increased water use. There might also be increased charges for Internet access, home contents insurance or business telephone calls. Where working at home leads to a liability for business rates the additional cost incurred can also be included.

The additional household costs must be reasonable and must be incurred in carrying out theduties. This excludes costs that would be the same whether or not the employee works at home, for example mortgage interest, rent, council tax or water rates. It also excludes expenses that put the employee into a position to work at home, for example building alterations or the cost of furniture or office equipment.

For guidance on the amounts that can be reimbursed, see EIM01476.

As regards broadband internet charges, see EIM01475.

For an example see EIM01478.

As regards NICs, see NIM05682.