Claiming Expenses - Sole Trader w/ employee

Discussion in 'Accounts & Finance' started by lizzy chaplin, Feb 16, 2021.

  1. lizzy chaplin

    lizzy chaplin UKBF Newcomer Free Member

    3 0
    Hi All,

    I'm a sole trader with one employee ( who I pay approx £7,000 a year ). My employee works from home and has asked if she would be able to claim back any electricity or internet bills? (She is a sewist)

    I understand she doesn't earn enough to pay tax but would she be able to claim back any expenses for her bills? Or is this something I could do for the business as a sole trader?

    Thanks in advance!
     
    Posted: Feb 16, 2021 By: lizzy chaplin Member since: Jan 6, 2021
    #1
  2. STDFR33

    STDFR33 UKBF Big Shot Free Member

    4,614 1,232
    You need to pay tax to take advantage of the relief.
     
    Posted: Feb 16, 2021 By: STDFR33 Member since: Aug 7, 2016
    #2
  3. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

    13,388 2,511
    If she doesn't pay any tax she cant actually claim anything back.

    I would think the best way to deal with this would be for you to pay an additional amount to cover the costs she's incurring working at home.
     
    Posted: Feb 16, 2021 By: MyAccountantOnline Member since: Sep 24, 2008
    #3
  4. lizzy chaplin

    lizzy chaplin UKBF Newcomer Free Member

    3 0
    Thanks for your quick reply, where do I stand if I pay tax as a business? Can I claim back this way for bills?
     
    Posted: Feb 16, 2021 By: lizzy chaplin Member since: Jan 6, 2021
    #4
  5. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

    13,388 2,511
    This link explains the tax relief which she may be abcould claim if she paid tax
    You can claim expenses to reduce your tax if expenses are wholly and exclusively for the purposes of your trade. I see no issue with you increasing your employees salary to cover her costs whilst working at home.
     
    Posted: Feb 16, 2021 By: MyAccountantOnline Member since: Sep 24, 2008
    #5
  6. Trevor Andrews

    Trevor Andrews UKBF Newcomer Free Member

    23 6
    Firstly I would check with your accountant but in my experience she could end up paying more tax if she tries to claim this as she is an employee and they may see it as a benefit. I was a salesman with company car and mobile phone built in (1980’s) and had to pay for the privilege.

    As others have suggested an allowance that you could add to her salary might be better.
     
    Posted: Feb 17, 2021 By: Trevor Andrews Member since: Feb 9, 2021
    #6
  7. WaveJumper

    WaveJumper UKBF Enthusiast Free Member

    750 149
    All of the above but also raises the question of is she actually employed by you officially, are you paying minimum wage and from her prospective is she charging you enough for the work to cover the extra expense she is incurring working at home
     
    Posted: Feb 17, 2021 By: WaveJumper Member since: Aug 26, 2013
    #7
  8. Paul Norman

    Paul Norman UKBF Ace Free Member

    3,096 983
    There is a specific tax allowance for anyone who works from home. It is not very much! And, of course, if someone doesn't pay any tax, it doesn't help them at all.

    One might argue that an allowance from yourself, in the form of a small wage increase, might be a better way of addressing the fact that asking our teams to work from home does cost them money.

    Of course, it also saves them travel costs. There is a conversation to be had here between your team member and yourselves.
     
    Posted: Feb 17, 2021 By: Paul Norman Member since: Apr 8, 2010
    #8
  9. Newchodge

    Newchodge UKBF Big Shot Free Member

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    Posted: Feb 17, 2021 By: Newchodge Member since: Nov 8, 2012
    #9
  10. ecommerce84

    ecommerce84 UKBF Regular Free Member

    920 325
    If she’s any good, I’d give her a rise to cover it.

    If she’s only sew-sew I wouldn’t.

    Either way, don’t allow yourself to get stitched up.
     
    Posted: Feb 17, 2021 By: ecommerce84 Member since: Feb 24, 2007
    #10