The tax uncertainty around working from home as a freelancer or employee of one’s own company – or through an umbrella company – has been seized on as a target for change.
Recognising that home-working has become a “complexity,” the Office of Tax Simplification says it wants to create one clear definition of the practice, so it applies for all tax purposes.
The envisioned code, recommended last week to George Osborne ahead of his Budget in March, would distinguish between those who work from home because they can, and those who have a “genuine business need.”
Working from home and the associated tax implications were in September flagged up as an issue that appears to confuse workers, but the office has signalled it may also bewilder clients and employers.
Less positively for individual workers, the OTS recommends that the facility for employees to claim the cost of expenses not covered by employers in working from home, such as telephone/internet bills, should be removed.
However it says that the withdrawal should be on
condition that an uplifted home-working allowance, probably £10 a week, is
introduced and becomes payable free of tax/NIC, assuming the person meets the definition
of a ‘homeworker.’