What is the homeworker's allowance

Picture of Agnese Geka
Jun 21, 2012 - 10:06
Home worker's allowance

What is the Home Working Allowance?

If you have made the decision to work from home, make sure you are in possession of all the information you need to get started. Seek advice on taxation from government sources and find out what forms need to be filled in before you do anything. This can probably be done online, but if you would rather speak to someone face to face for advice, then pop into your local tax office for information. The actual allowance for working from home on a self employed basis is exactly the same as it would be if working for an employer. However, there are some further allowances that you can apply for.

Everyone has what is known as a Personal Allowance, which is the amount you are allowed to earn each year before income tax is applied. This amount will depend on your age and the total amount of money you have made within the tax year. The current allowance running from 2012 - 2013 is at its highest ever and you can now earn £8,105 before paying any tax. Your tax free allowance will be even higher if you are over 65.

Tax Relief on Household Expenses

If you are employed specifically to work at home you may be able to claim on some of your household expenses and you are permitted to calculate back several years, dependent on whether you have already sent in a Self Assessment Tax Return. You are able to claim on business necessities such as gas and electricity or your telephone bill. For expenses claimed in excess of £18.00 per month, you will be required to show proof that these expenses are genuine - anything below this is generally accepted without evidence. You can only claim for additional expenses that you incur because you are working from home, i.e. you cannot claim for things like rent, mortgage or Council Tax.

Other Allowances

If you are certified blind, or are unable to carry out work where eyesight is essential (and are a resident of Scotland or Northern Ireland), then you should be able to claim for Blind Person's Allowance. There is also a Married Couples Allowance available, which civil partnerships are also eligible for, provided you are currently a tax payer.

Online Options

Starting your own online business can seem a little daunting, especially if you have little or no experience in such ventures. However, a little assistance in setting up and some good advice and you could be on your way in no time at all. There are various ways of making money working from home online - you may have a product idea that you would like to market and setting up an online blog and website is the best way of going about this; you might want to write reviews on other products or write online articles for various companies.

If you want to sell your own product on line, do a little marketing, experiment and be prepared to adapt your product if necessary. Selling these days is a lot different than it used to be - if you are able to cleverly market a good item and set up a great website (get some help with this if necessary) in order to sell it, who knows what kind of money you could be making in a few years time. Start as you mean to go on with regard to your bookkeeping, and keep everything up to date. There are some good, basic accounting packages available free online that could assist you in making sure your tax returns are as straight forward as they can be. Make sure you know what you are entitled to from the start.

Other Options

Many people prefer not to have their nose stuck in a computer all day and there are other options if this is the case. Childminding has the potential to make you a great deal of money, as you will no doubt be aware if you already have children of your own. (The price of nursery care today is sky high). You will need to seek advice from the authorities if going down this route and it won't be suitable for everyone. If you do have children of your own, this is a perfect opportunity to turn being a stay at home parent into a profitable venture. The HMRC website provides some invaluable information on what a child minder can claim against tax.

If you are an animal lover, then dog walking could be right up your street - fresh air, plenty of exercise and an income! You should be able to find some good advice online regarding this type of venture to get you started. You would be classed as self employed and so all of the rules surrounding being self employed apply.

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