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Tax relief on office rental for a PAYE worker - any options?

  • 27-07-2020 10:38pm
    #1
    Mrs OBumble
    Registered Users Posts: 25,666 ✭✭✭✭


    I'm in discussions with a company about a possible full-time PAYE position - which will be 100% "work from home".

    Now, my home is not suitable for long-term office work. The only way I can do this is if I rent extra space. I can either move to a larger apartment, which I don't really want to do, or rent a small office within 2km of home, in case we have another lockdown.

    As a PAYE worker, I know that work-related expenses are not usually tax-deductible. But there's something in the back of my mind that there are some exceptions. Does anything know of anything that applies here? (It may be in the back of my mind from another country :( )

    The whole thing is actually mightily annoying me. Based on Daft, it look like it will cost me about 5k to rent an office. If I have to pay that from after-tax income, that means it takes 10k of my salary (round terms). But if the company paid it, the cost to them would be 5k less 12.5%.

    I explored being a self-employed contractor for them, but they're not interested: I'd still be working hours they set, supervised by them, using their equipment, so it their eyes I meet the "employee test".


Comments

  • #2
    barneystinson
    Registered Users Posts: 4,683 ✭✭✭barneystinson


    I've never seen this circumstance before in the case of a PAYE employee and unfortunately I don't think that you would obtain a deduction for the rent cost.

    To act as a contractor you'd need to set up your own Ltd company and contract through that. This should be doable though, and your company would be entitled to a deduction for the cost of renting office space.

    As you'll be aware, you'd lose the benefits of being an employee of the client company, and you'd be bearing your own PRSI, so the pay would need to be negotiated upwards accordingly.


  • #3
    Lenar3556
    Registered Users Posts: 1,350 ✭✭✭Lenar3556


    Mrs OBumble wrote: »
    I'm in discussions with a company about a possible full-time PAYE position - which will be 100% "work from home".

    Now, my home is not suitable for long-term office work. The only way I can do this is if I rent extra space. I can either move to a larger apartment, which I don't really want to do, or rent a small office within 2km of home, in case we have another lockdown.

    As a PAYE worker, I know that work-related expenses are not usually tax-deductible. But there's something in the back of my mind that there are some exceptions. Does anything know of anything that applies here? (It may be in the back of my mind from another country :( )

    The whole thing is actually mightily annoying me. Based on Daft, it look like it will cost me about 5k to rent an office. If I have to pay that from after-tax income, that means it takes 10k of my salary (round terms). But if the company paid it, the cost to them would be 5k less 12.5%.

    I explored being a self-employed contractor for them, but they're not interested: I'd still be working hours they set, supervised by them, using their equipment, so it their eyes I meet the "employee test".

    Would there be any prospect of they renting the office space directly, as part of the overall agreement with you?


  • #4
    y0ssar1an22
    Registered Users Posts: 15,978 ✭✭✭✭y0ssar1an22


    you may have been thinking of this:

    https://www.revenue.ie/en/employing-people/employee-expenses/removal-and-relocation-expenses/index.aspx

    if you are willing to move, and the employer supports it, this will work.

    there may be something here as well to help:

    https://www.revenue.ie/en/employing-people/employee-expenses/e-working-and-home-workers/index.aspx


  • #5
    barneystinson
    Registered Users Posts: 4,683 ✭✭✭barneystinson


    y0ssar1an22 wrote: »
    you may have been thinking of this:

    https://www.revenue.ie/en/employing-people/employee-expenses/removal-and-relocation-expenses/index.aspx

    if you are willing to move, and the employer supports it, this will work.

    Work how? The only reimbursable items are costs of relocating, subsistence while getting new accommodation sorted. Not any of the actual cost of rent on a new property, which is always a private expense.


  • #6
    wally1990
    Registered Users Posts: 1,222 ✭✭✭wally1990


    Between a rock and hard place because there is nothing in the employer<>employee reimbursed tax rules for that situation

    As you know there is for remote working from home where there is an objective requirement your work is carried from there but your situation of saying ''
    Now, my home is not suitable for long-term office work.' is not covered and choosing to rent a space is prob seen as a personal choice by the revenue.

    It is through covid19 and the increase in such new ways of working your situation is becoming more of the norm though and using the home 100% genuinely isn't suitable for people who rmeote work but again its not covered for any tax relief where you choose as a paye worker to rent a space.

    Personally I would see if they could they look at your salary on offer v salary reduced but factor in an office space/hot desk costs covered agreement in your contract.

    Basically if you've decided deep down you down want to work from home and need an office space then I would reduce salary and ask them to cover such cost

    Rveneue aren't going to give you anything unfortunately

    Self employment is an option in general for expenses but as mentioned not in your situation for this role

    Good luck anyway!!


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  • #7
    y0ssar1an22
    Registered Users Posts: 15,978 ✭✭✭✭y0ssar1an22


    barneystinson wrote: »
    Work how? The only reimbursable items are costs of relocating, subsistence while getting new accommodation sorted. Not any of the actual cost of rent on a new property, which is always a private expense.

    Yeah, I read that incorrectly.

    There is a 3 month rent period your employer can pay you for tax free if its temporary accommodation:

    the vouched rent of temporary accommodation for a period not exceeding three months (this may not be paid concurrently with the temporary subsistence referred to above).

    https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-02-03.pdf


  • #8
    Marcusm
    Registered Users Posts: 10,183 ✭✭✭✭Marcusm


    y0ssar1an22 wrote: »
    Yeah, I read that incorrectly.

    There is a 3 month rent period your employer can pay you for tax free if its temporary accommodation:

    the vouched rent of temporary accommodation for a period not exceeding three months (this may not be paid concurrently with the temporary subsistence referred to above).

    https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-02-03.pdf

    But there is no relocation in this instance; the OP has an opportunity to take up new employment which involves working from home. There is no relocation and certainly no basis for a subsistence payment.

    Employees may obtain tax relief for expenses incurred wholly, exclusively and NECESSARILY in the course of their employment. A separate workspace for which there is no personal benefit might meet the high level requirement here. There is no duality of use (such as with a barrister’s suit). In theory, it should be no different to using a personal car for necessary business travel in respect of which (absent any reimbursement from the employer) there would be a basis for a claim for expenses relief. However, I suspect that this will be an unusual claim which might be challenged. It is not a question without merit, however. The OP would likely have to bear some uncertainty; however, if it is genuinely the case that working from home is an impossibility then there may be a reasonable basis for a claim. Revenue would generally expect that the employer would provide the workspace, however, which is why the claim would be resisted.


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