At present, the way that expenses incurred by home-based employees are treated for tax purposes depends on individual decisions by Revenue officers. For example, some employees may find that equipment their company provides is viewed as a taxable perk.
According to Moira Conoley, a partner with Coopers & Lybrand, this means that employers are obliged to negotiate with Revenue offices on a case- by-case basis. 'With the increase in home working that we foresee, it's going to become an administrative nightmare,' she said. Her company wants the Government to draw up clear national guidelines covering the main areas of contention.
The issues include the tax and National Insurance treatment of capital equipment used at home for work purposes, telephone charges and payments made to staff to cover such things as extra electricity and insurance costs. Ms Conoley says that companies may find it simpler to install and pay for a new business phone line. She also recommends that companies should ban the personal use of work equipment.
Another possible pitfall is the question of whether homes used partly for work purposes are liable for business rates. Furthermore, in theory at least, partial business use could call into question the normal 100 per cent exemption from capital gains tax for first homes.
Ms Conoley also draws attention to the rules that prevent employees from setting travel expenses to and from work against tax. She says that the Government should clarify the regulations so that employees working at least 50 per cent of the time from home are considered as based there for travelling-cost purposes.