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HMRC internal manual

Employment Income Manual

Tax treatment of teachers, lecturers and tutors: Association of University and College Lecturers: notes on expenses deductions: use of accommodation at home: amount of allowance

“7. Use of accommodation at home (continued)

[NOTE: Since these notes were written, HMRC has changed its view regarding the nature of the expenses which can be taken into account in calculating the deduction for “use of home”. See EIM32815

The amount of any allowance will depend upon all relevant facts. Where a room is set aside by the teacher at his home for exclusive use as a study, as a broad guideline the allowance to be claimed is calculated by dividing the total running costs of the home by the number of main rooms, that is, omitting bathrooms, lavatories and entrance hall. The costs to be brought into account include:

  • Lighting and heating.
  • Council Tax, but not water rates.
  • Cleaning.
  • Rent (if any) paid to a landlord.

Where only part of a room is used by a teacher for his/her work, or the room set aside as a study is used substantially for other purposes, he/she may be able to claim a proportion of the sum given by the above calculations, although in many cases this proportion will usually be so small as to be negligible.

The Inland Revenue has emphasised that because of the few circumstances in which this deduction can be given the exceptional nature of this concessional treatment, there can be no question of a flat-rate allowance to cover the use of a study at home.

The Inland Revenue has also made it clear that even where an allowance is given for the use of a study at home, the deduction concession will not be extended to include the cost of furniture used in the study (e.g. desk, chair, bookcases etc.) or depreciation of such furniture. It has further been agreed that where a study allowance is given under Schedule E, no liability to Capital Gains Tax will be incurred on a sale of the dwelling as regards the proportion of the sale price attributable to the study, provided that the dwelling was the teacher’s principal residence.”