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Summary:

With Gordon Brown‘s fiscal reputation following Dubya‘s own battered rep into a swirling black hole of oil prices and crunchy credit, it’s heartening to know that (sometimes) Her Majesty’s government can still do its subjects a few financial favours here in Blighty. A couple of weeks […]

With Gordon Brown‘s fiscal reputation following Dubya‘s own battered rep into a swirling black hole of oil prices and crunchy credit, it’s heartening to know that (sometimes) Her Majesty’s government can still do its subjects a few financial favours here in Blighty.

A couple of weeks ago, the UK’s tax authority – Her Majesty’s Revenue & Customs Service – announced a number of measures that may benefit Britain’s web workers, and more broadly, any Brits working from home.

Those working from home whom have a portion of their residence setup as a dedicated work area or office can claim that portion as a tax rebate. Also, they no longer have to pay capital gains tax on the sale of their home.

As generous and farsighted as the HMRC’s change of heart might seem, some close examination of the conditions under which these rebates can be claimed underlines how little the UK government understands about the nature of web workers in particular. Notable, in the BBC’s report are the following provisos…

HMRC are content to allow a proportion of these costs to be claimed against the income of the business if certain criteria are met, such as:

  • The area of the home is used exclusively for business purposes for a prescribed amount of time – say, 9am to 5pm – this means that if you sit at the kitchen table working you won’t qualify for the additional deductions. What the taxman is looking for is an area that has the appearance of an office – so it will contain a desk, chair, storage etc.
  • The amount claimed is reasonable in relation to the business – so you can’t claim that you work 20 hours a day in the office or that the area used is a large proportion of the living area of your home.

Apart from these two provisos, you will be able to claim a percentage of the total cost of running the home.

Ooops – nobody asked the web workers!
To the first proviso, one of the advantages of working from home is the physical flexibility granted to the worker; personally I don’t have a dedicated office – sometimes I work in the dining room, the lounge, family room and even the conservatory. It’s difficult to understand why HMRC are insisting on dedicated work areas and offices in the home, when its the nature, time and intensity of work that’s a more important measurable factor than location.

To the second point, again flexibility is key, in that workers dip in and out of work and domestic tasks often in the same physical space – it’s one of the reasons we work from home!

Still many of the examples given by the HMRC are illustrative and useful and the mortgate rebates are pretty generous. Though web workers represent only a proportion of those who work from home and laws need to be formulated for broad groups, it’s frustrating that the views of web workers weren’t more keenly understood – even consulted as a group – before such important legislation was completed. On the other hand, where would the UK government go to elicit the views of this community?

Web Workers Unite!
What this tells me, alongside my previous thoughts on commuting and coworking, is that web workers need to represent themselves more confidently, ensuring their unqiue perspectives are heard and noted by our politicians. As a group we’re on the bleeding edge of working practices, often at the forefront of civic and social change, but we have a responsibility as citizens to bring those experiences and passions to the attention of our politicians.

As James Bond swore an oath On Her Majesty’s Secret Service, perhaps we all need to declare some principles for Her Majesty’s Web-based Workforce!

Could WebWorkerDaily – who’s brand and iconography alludes to collectivism -  be a platform to help groups organise and represent themselves to legislators and politicans more confidently and muscularly in their localities? Should we be doing more activism as a group to influence monetary, social and civic policies?

What are your thoughts?

  1. I find it ironic that ‘Webworkers’ choose to align themselves with ‘collectivism’ when the entire strength behind web working is individualism, working on your own, on things that interest and inspire you.

    Collectivism is all about the Government forcing ONE way of life, power by the many over the individual. The individual means NOTHING to the collective, except someone to collect taxes and labor from.

    Hitler, Stalin, Mao – they were collectivists who murdered millions, if not billions of people.

    Are you sure you want to join that gang?

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  2. Here in Germany we also have similar rules for claiming business expenses for working from home.

    There are some odd rules that contribute towards the tax office deciding whether your home office is “real” or not. For example, things that will get your office excluded for tax purposes include having a sofa or TV in the office, having winter clothes stored in a cupboard in the office and so on.

    One of the odd rules you have to be careful of here is that the office is not part of a corridor to another room. If your office is between the living room and a bedroom, for example, then it does not count as a business office as you are making personal use of the space when you go through the office from the living room to the bedroom.

    This issue of tax deductions for home offices has always been a big issue here in Germany. Until recently it was possible for teachers to claim for a home office as they took work home to mark. That has now been stopped as the home office has to be the centre point of your work. That is not the case for teachers, who of course spend most of their time at school.

    It was also interesting there was a big debate between the tax office and judges who traditionally spent much time at home working on writing the verdicts on their cases. This raised the question of where the “middle point” of their work was …

    So, it is not just the UK that has some strange ideas about what “working from home” means.

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  3. I know several web workers that spend much of their working hours in the coffee shop. Just saw a post from Brian Gardner claiming the same thing. This would obviously not benefit those folks. Still, this joining together to “fight the power” thing seems a bit over the top.

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  4. @Tom cool your jets, I’m clearly not advocating government intervention or fascism, that’s just idiotic!

    I’m suggesting that as governments formulate policies, communities that lead initiatives such as coworking and home-working have useful & interesting insights on working life that can help formulate better public policy. I’m saying that representing those views can help wider societal goals that will benefit more than just web workers.

    @Chris Yes, many do work out of coffee shops (me included) and I’m not suggesting any kind of ‘fight the power’ militism. Simply that the experience of such workers in coffee shops, coworking communities etc is overlooked by those formulating policy. I’m leaving an open question as to whether those communities can represent themselves better so that policy *can* benefit them and others.

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  5. The ability to claim a % of home office expenses in the UK is not new (what is new is the capital gains tax thing and perhaps the fixed costs?).

    It’s also untrue that you can’t work from the kitchen or dining room. (@Imran – check out Example 4).

    To make an already complicated affair even more so, the rules are totally different if you are a “sole trader” or a “limited company”.

    I work as a Limited Company (it’s tax-efficient for my situation) but that means I can’t take advantage of claiming a portion of my home as a business expense.

    (Deffo something you need specialist advice on!)

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  6. @Ali – You’re inviting the political posts by choosing to inject politics and irrelevant jabs at leaders who have nothing to do with the subject of your post. What does President Bush have to do with tax law in the UK? (BTW, the deductions related to a home office have been policy in the USA for many years.)

    Just as most audience members at a music concert go to hear the artist’s music and not a political harangue, so do WWD’s readers come here to read about web work subjects. You can provide that material without the snide political jabs that alienate some of your readers. So, my advice to you is the same I would give the aforementioned musical artists: “Shut up and sing.”

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