Author Archives: accounts

Claiming for working at home

Employees who are working at home may be entitled to claim tax relief on certain work-related expenses. Where such costs are not reimbursed by the employer, either by direct payment or an allowance, employees can submit a claim for tax relief directly to HMRC.

Eligibility to claim tax relief applies when homeworking is a requirement of the role. This may be the case if an employee's job necessitates living at a distance from the office, or if the employer does not maintain a physical office. Tax relief is generally not available where homeworking is a personal choice, even if permitted under the terms of the employment contract or where the office is occasionally at capacity.

Employees may claim a flat-rate tax relief of £6 per week (or £26 per month for monthly-paid staff) to cover additional household costs incurred as a result of working from home, without the need to retain detailed expense records. The value of the relief depends on the individual’s highest marginal rate of tax, for example, a basic-rate taxpayer (20%) would receive £1.20 per week in tax relief (20% of £6). Alternatively, individuals may opt to claim the actual additional costs incurred, provided they can supply evidence to HMRC in support of the claim.

Backdated claims for up to four previous tax years are permitted.

Tax relief may also be available for the use of a personal vehicle be it a car, van, motorcycle or bicycle when used for business purposes. Relief is not available for ordinary commuting between home and a regular place of work. However, where travel is to a temporary workplace, or where the vehicle is used for other qualifying business journeys, tax relief may apply.

In addition, employees may claim tax relief on the cost of equipment purchased personally for work-related purposes, such as a laptop, office chair, or mobile phone, provided these are used exclusively or primarily for business use.

Source:HM Revenue & Customs | 20-10-2025

Claiming lettings relief

If you have tenants in your home, it’s essential to understand the Capital Gains Tax (CGT) implications. Typically, there is no CGT on the sale of a property used as your main residence due to Private Residence Relief (PRR). However, if part of your home has been let out, your entitlement to PRR may be affected.

Homeowners who let out part of their property may not qualify for the full PRR, but they could be eligible for letting relief. Letting relief is available to homeowners who live in their property while renting out a portion of it.

The maximum letting relief you can claim is the lesser of the following:

£40,000
The amount of PRR due
The chargeable gain made on the part of the property let out

Example:

You rent out a large bedroom to a tenant, making up 10% of your home.
You sell the property and make a gain of £75,000.
You qualify for PRR on 90% of the property (£67,500).
The remaining gain of £7,500 relates to the portion of the home that’s been let.

In this case, the maximum letting relief due is £7,500, which is the lower of:

£40,000
£67,500 (the PRR due)
£7,500 (the gain on the part of the property that’s been let)

As a result, you would not owe any CGT—the £75,000 gain is fully covered by £67,500 in PRR and £7,500 in letting relief.

Note that if you have a lodger who shares living space with you or if your children or parents live with you and pay rent or contribute to housekeeping, you are not considered to be letting out part of your home for tax purposes.

Source:HM Revenue & Customs | 20-10-2025

Reporting foreign income to HMRC

If you are UK resident and receive income from abroad, such as overseas wages, rent, or investments, you may need to pay UK Income Tax and report it through Self-Assessment.

Income Tax is generally payable on taxable income received by individuals including earnings from employment, earnings from self-employment, pensions income, interest on most savings, dividend income, rental income and trust income. The tax rules for foreign income can be complex.

However, as a general rule if you are resident in the UK you need to pay UK Income Tax on your foreign income, such as:

wages if you work abroad
foreign investments and savings interest
rental income on overseas property
income from pensions held overseas

Foreign income is defined as any income from outside England, Scotland, Wales and Northern Ireland. The Channel Islands and the Isle of Man are classed as foreign. Different rules may apply if you’re eligible for Foreign Income and Gains relief.

If you are a UK resident, then you will usually need to complete a self-assessment tax return for foreign income or capital gains. The main exceptions are if your only foreign income is dividends and your total dividends (including UK dividends) are less than the £500 or you have no other income to report.

Source:HM Revenue & Customs | 20-10-2025

Reliefs and allowances for Corporation Tax purposes

Companies can reduce their Corporation Tax bill through a range of reliefs, including R&D credits, Patent Box, and creative industry tax reliefs, all of which will help to lower the overall tax on profits. Your company can also claim capital allowances for assets such as equipment, machinery and cars bought to use in your business.

The basic Corporation Tax reliefs include the following:

Research and Development tax reliefs – The R&D expenditure credit (RDEC) and enhanced R&D intensive support (ERIS) came into effect for accounting periods beginning on or after 1 April 2024. While the expenditure rules for both are the same, the calculation methods differ. The merged RDEC scheme is a taxable expenditure credit available to eligible trading companies subject to UK Corporation Tax. Even if a company qualifies for the ERIS, it may choose to claim under the merged scheme instead, but both schemes cannot be claimed for the same expenditure.

The Patent Box – This relief allows qualifying companies to apply a lower 10% corporation tax rate on profits arising from patent exploitation.

Creative industry tax reliefs (CITR) – This is the term for a collection of Corporation Tax reliefs that allow qualifying companies to claim a larger deduction, or in some circumstances claim a payable tax credit when calculating their taxable profits. The relief applies to qualifying expenditure in the production of certain films, high-end television, animation, video games, children’s television, theatre, orchestra and museum & galleries exhibitions.

Relief on goodwill and relevant assets – If the relief is available, it is at a fixed rate of 6.5% a year. This is on the lower of the cost of the relevant asset or 6 times the cost of any qualifying IP assets in the business purchased.

Loss relief – There are various Corporation Tax reliefs that may be available where your company or organisation makes a trading terminal, capital or property income losses. For example, trading losses may be used to claim relief from Corporation Tax by offsetting the loss against other gains or profits of the business in the same or previous accounting period.

Source:HM Revenue & Customs | 20-10-2025

Report and pay Capital Gains Tax

If you sell assets such as shares or land, you may need to report your Capital Gains Tax either through Self-Assessment or HMRC’s ‘real time’ CGT service; deadlines and rates depend on the type of asset sold.

If you have Capital Gains that are not related to the sale of UK residential property after 6 April 2020, there are two main ways to report them. The first is by filing a self-assessment tax return or using the ‘real time’ Capital Gains Tax (CGT) service. Before reporting, you must determine if you need to pay tax and how much you owe.

For reporting in a self-assessment tax return, you will include your Capital Gains for the tax year after you sell or dispose of an asset. You can seek help from an accountant or tax advisor, and after submission, HMRC will provide details on how and when to pay.

Alternatively, the ‘real time’ CGT service allows you to report gains from assets sold during the 2024-2025 or 2025-2026 tax years. This service is only available to UK residents and cannot be used for certain items like UK residential property gains or foreign tax credits.

After reporting, HMRC will issue a payment reference number (starting with ‘X’), which you can use for payments via online banking, cheque, or the online tax payment service. You must report your gain by 31 December in the tax year following the gain and pay by 31 January. For example, if you made a gain in the 2024-25 tax year, you need to report it by 31 December 2025 and pay by 31 January 2026.

The main CGT rates for assets other than residential property and carried interest is currently 18% for Income Tax basic rate payers and 24% for Income Tax higher rate payers.

If you sell UK residential property not covered by the Private Residence Relief, for example, a second home, then you must report the sale with a calculation of any CGT due, within six months of completing the sale. HMRC have set up a separate filing process to report these gains.

Source:HM Revenue & Customs | 20-10-2025