The dramatic cultural and societal changes brought about by Covid-19 have been felt particularly keenly by the nation’s office workers.
Twice-daily commutes have been abolished. The colds and viruses which sweep around air-conditioned buildings are absent. And tea breaks involve your own kettle and biscuits.
More significantly, productivity is now dependant on home broadband connections, rather than corporate connections managed by in-house teams of IT professionals.
However, if your existing connection isn’t cutting the mustard during the nine-to-five grind, it may be necessary to consider upgrading home internet services.
If this is being done primarily because of work commitments, is broadband tax-deductible?
Could the cost of upgrading an ADSL connection to a full fibre broadband deal be justified as a legitimate business expense, and offset against next year’s tax return?
Tax does have to be taxing
Having evolved over hundreds of years with little in the way of simplification or streamlining, the UK’s tax laws are astonishingly complex.
In 2016, it was estimated that they extended across ten million words, with innumerable addenda and revisions attempting to close loopholes created by ambiguous legislation.
Tax law is a highly specialised career path, and even scratching the surface of current tax legislation would need an article far longer than this one.
However, a few salient points can be discerned amid the fog of legislative confusion, depending on your work status:
If you’re self-employed
Self-employed individuals can claim for any broadband costs incurred as part of working from home. However, tax relief will be restricted for any private use.
In practice, it’s difficult to ascertain how much internet use is for business purposes, so HMRC should accept a reasonable percentage in a broadband tax-deductible claim.
Where possible, records ought to be kept to support any apportionment made. It’s unlikely your Netflix activity will be scrutinised, but a subscription should at least be acknowledged.
If you’re a company director
A limited company director’s home broadband is tax deductible for the firm, and can be offset against a corporation tax return providing it’s paid through the business bank account.
In theory, a benefit in kind ought to apply on the director’s P11D if the connection is used for both business and private use.
HMRC do accept that if any private use is insignificant, there is no taxable benefit for the director. Again, though, the definition of ‘significant’ is open to debate.
If you’re a home-based employee
Here, the rules are more restrictive. Because you can’t claim for things used for both personal and business use, no tax relief is available on home broadband costs.
However, as of 6 April 2020, employers can pay up to £6 a week to cover the additional costs of having to work from home.
Even then, this relief is qualified. If you chose or volunteered to work at home, nothing can be claimed.