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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Other expenses: home: household expenses: relation between deduction for employee’s expenses and exempt homeworking payments: examples

Sections 316A and 336 ITEPA 2003

Example 1

An employer introduces a homeworking policy under which employees who wish to work from home may do so. The employer makes a payment of £4 per week towards the additional household expenses of those employees who decide to work from home. The £4 per week is exempt from tax under Section 316A ITEPA 2003 (see EIM01472 onwards). However employees who can show that working from home costs them more than £4 per week are not able to obtain a deduction for the excess under Section 336 because they are working at home by choice. The conditions for relief under Section 336 are more restrictive than the conditions for exempt payments under Section 316A.

Example 2

The North of England representative of a company whose only offices are in London is entitled to a deduction under Section 336 ITEPA 2003 for the expenses of working at home. He produces evidence that his additional household expenses, allowable under Section 336, amount to £4 per week. However, his employer makes a contribution of £3 per week towards those expenses. That contribution is exempt from tax under Section 316A. The amount the employee is able to deduct under Section 336 is therefore £1 per week, being the difference between his allowable, additional expenditure of £4 per week and his employer’s reimbursement of £3 per week.