This is an area that many self-employed people trip up on. There is a
widespread belief that if you work from home and use your domestic
telephone line and broadband connection for business purposes, a fair
proportion is re-claimable by you as expenses from your company.
However, that is not necessarily the case! Sole traders can get away with it because they and their business are one and the same, but a limited company is a separate legal entity. If you claim expenses from your company, they must pass the notorious rules on employment expenses; ie that they must be wholly, exclusively and necessarily
incurred for work purposes.
The difficulty with telephone and broadband is that a) domestic bills are
in your own name, and b) the bills often consist mainly of a fixed rate
monthly tariff or line rental. You might think that if you use your
domestic broadband connection 90% for business then you can claim
90% back from your company, but as you would have had to pay the
full tariff anyway regardless of whether there was any business use or
not, you are not actually out of pocket. Only itemised charges that can
be identified as wholly for business use can be claimed.
This means that the bills (and also the contracts) have to be in the company name for you to be able to claim more than a few pounds each month, and not many people relish the prospect of going through a long list of call charges to identify the business ones. Sadly, most of the mass-market broadband companies only do residential contracts or would charge you a lot more for an equivalent commercial contract.
If you do manage to get a contract in your company name (say for a
separate business line) then only 2 conditions must be met:
a) The contract must be for the purpose of enabling you to do your job; and
b) There must not be significant domestic use
These are both subjective judgments and you should not fall foul of
them except in the most clear-cut of cases.
Obviously this is not good news for most self-employed people working
at home. Fortunately, there is another method of claiming back a fair
proportion of your telephone and broadband expenses which avoids
the employment rules, and for this you should see our information
sheets Working at Home and Rent for Home Offices.
