Christmas gifts from your company (and from the tax man!)

All employees who work from home are entitled to be paid a £3 per week tax free home working allowance.You do not have to pay this week by week. Instead you choose to pay it as a lump sum (eg to coincide with Christmas). This means that £156 can be paid as a tax free lump sum now, which would save tax of £62 for a higher rate tax payer, plus national insurance savings of up to £20 for the company and £17 for the employee, a total saving of £99 per person!

Note that:

For the purpose of this rule, “employees” are anyone on the payroll and any director or company secretary of the company.
The £3 allowance can be paid for each week in which some work is done from home. This includes business related phone calls, logging on to do emails or other computer based work, bookkeeping and even discussing business issues with your spouse or partner!
If you decide to make this £156 payment, you just need to record it in your accounts as “Home working allowance for [name] for [6.4.08 to 5.4.09]. No other paperwork is needed.”
Please contact me (on susank@kandh.co.uk or 0118 923 5811) or your usual contact at K&H for more information.

Susan Kemish
Accounts & Tax Operations Director