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HMRC internal manual

Employment Income Manual

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

Section 336 ITEPA 2003

A computer software designer is a director of his own service company. The company markets payroll software that he designs. In addition the company supplies the services of the designer to supply and customise the software for particular clients. The service company pays the designer’s travelling expenses when he visits clients.

The registered office of the company is at the designer’s home. One room of the designer’s home is used exclusively for company business. The room contains all of the equipment necessary for the company’s trade. The designer does all his work there when he is not working at client’s premises. On average he works at home for four days a week. Sophisticated security equipment has been installed in the room to protect confidential data.

A dispensation can be given for the travelling expenses, see EIM30051. In addition the designer can deduct a proportion of certain household expenses, see EIM32810. The work carried out at home is part of the substantive duties of the employment, see EIM32800. The nature of the work, particularly the need for security equipment, means that there is an objective requirement for the work to be done at home. Therefore the home can be accepted as a workplace.