H.M. Revenue & Customs, Household Expenses and High Income Child Benefit Charge

H. M. Revenue & Customs

HMRC is the tax raising and collection organisation of the UK.  All tax returns are submitted to HMRC and some will be selected for review each year.  In addition, an enquiry may be opened into a return if something looks odd to the Inspector of Taxes.

For the self-employed and small companies you may be contacted for a Business Records check.  If this happens do not panic, read our blog and our guest blog written by a self-employed trader who has had the call!

There is a lot of useful information on the HMRC website.

Household expenses

Employees that work from home can only claim £4 per week (excluding weeks of holiday) as a deduction against their earnings.  If you consider the expenses of working from home are higher it may be possible to justify a higher rate of deduction but you will need to keep documentation to support your claim.

If you are self-employed and you work from home then you can calculate a pro-rata share of your household costs as a deduction against your business profits.  You can include most household costs in your calculation including: gas, electricity, water, broadband, insurance, council tax and mortgage.

High Income Child Benefit Charge

A new piece of legislation introduced from January 2013 to charge tax on the family child benefit of high earners.  The charge only applies if one of the earners in the family has an income in excess of £50,000.  The charge will apply to the highest earner regardless of whether that person receives the child benefit.  See our blog post for more information.