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HMRC internal manual

Employment Income Manual

Other expenses: home: working from home: service companies: example

Sections 336-338 ITEPA 2003

A computer software specialist obtains work through her personal service company. She is a director and owns the bulk of the shares in the company. The registered office of the company is at her home. In 2003/04 her company had four consecutive contracts with different clients to install software at their premises. She lives in Reading and the contracts involved work at four different sites within Greater London. The company pays her travel costs.

In addition to the work at client’s premises she works at home in the evenings and weekends and also during times when her service company has no contracts. She deals with the payroll and bookkeeping for the company, familiarises herself with new software products and prepares for the work that she carries out at client’s premises.

The travel expenses paid to her by the company are chargeable under Part 3 Chapter 3 ITEPA 2003, see EIM01110. No deduction is available under Section 337 ITEPA 2003 from the amount charged.

Her home is not a place of work. The work that she does at home is not part of the substantive duties of the employment, see EIM32780. Her substantive duties are carried out at client’s premises. There is no objective requirement that she should work at home, the only requirement placed on her is to work at client’s premises.

However, it may be that each of the four sites at which she works is a temporary workplace, see EIM32075. If so, Section 338 ITEPA 2003 permits a deduction for the cost of travel between her home and each site.