THE LOST TAX RELIEF FOR PARTNERS’ EXPENSES

As a partner you could be missing out on claiming relief for your personal homeworking expenses, with COVID-19 throwing a spanner in the works, and with an increase in working from home you may be incurring more expenses that you haven’t yet claimed back.

How does it work?

All partners’ personal expenses must be solely for the purpose of the business to be able to qualify and claim relief. In order to do this the usual starting point is to claim them on your expenses and be reimbursed by the partnership. Sometimes though, an expense claim can’t be made, making the claim for tax relief more difficult, as you can’t claim the tax relief through your tax return.

The solution, is to make a claim through the partnership tax return and allocate them specifically to a partner. This means the expense is now deemed to have been incurred by the partnership. In effect, the expense is posted through the tax computation as a personal business expense. These outgoings are then deducted from the calculation of profits which can then be put onto the partner’s personal tax return and the problem is solved.

In light of the current climate, some expenses are COVID specific and others are normal items. All expenses must be for the benefit of the business, provided the partner meets the criteria and the wholly and exclusively test. With regard to examples of these expenses, they are as follows:

  • Working from home between £10 and £26 per month depending on hours worked.
  • Course fees.
  • Specific office equipment (desk, chairs and IT equipment).
  • Telephone and broadband.
  • Most other costs relevant to the business (supposedly tea and coffee).

How can we help?

At Hawsons we have a dedicated team of highly qualified and experienced tax specialists who offer personal and corporate tax advice from our offices in Sheffield, Doncaster and Northampton and we are here to support our clients throughout these difficult times.

If you would like to discuss your partnership expenses, please get in touch with your usual Hawsons contact who will be happy to help you.

More from our tax experts

You can find all of our latest tax articles and tax resources here.

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David Cairns

David Cairns

Tax Partner, Northampton

01604 645 600

[email protected]