You have always been able as an employee to claim expenses for working from home if your employer requires you to work at home. This has become much more relevant during the 2020/21 tax year due to the COVID-19 pandemic. HMRC has confirmed that claims from employees working at home due to coronavirus measures, if their usual workplace is closed, count as working from home for tax purposes.
There are 3 different ways working from home costs can provide tax relief to an employee:
- The employee can apportion costs ie, electricity and heating costs related to working from home– however this can get very complicated and you must keep all evidence showing the computation on file
- The employer can pay the employee an additional £6 per week tax-free on top of their current salary
- The employee can claim £6 per week tax relief – If your employer will not pay expenses for your extra costs due to necessary working from home, but you have them, then you can ask for the amount to be deducted from your taxable income. To make the process easy, HMRC have stated you will not need to keep receipts or documentation in relation to working from home expenses when making this £6 claim.
Tax relief of £6 a week equates to a gain of £1.20 a week for a basic 20% rate taxpayer, £2.40 a week for a higher 40% rate taxpayer.
If you believe you have higher increased costs than £6 a week, you can claim more, but you will need evidence and must be able to apportion these specifically to the fact you are working from home – and this becomes a much more difficult process.
HMRC updated their systems in October 2020 so you will only need to claim once, and you will automatically receive the £6 weekly allowance for the WHOLE tax year.
HMRC have confirmed that you can make this claim as long as you are required to work at home and have additional expenses due to it (for example internet, electricity and gas costs) even if:
- You are only working from home part time
- Others are going into work
- You are only needed to work from home for part of the week i.e. 1 day out of 5
The relief is an individual benefit and therefore each person in the household who is required to work from home may claim this amount for the 2020/21 tax year.
How to Claim the Working from Home Tax Relief
You can claim this amount by going to the below link and logging into your Government Gateway account:
You will need to enter the date you started working from home i.e. 23rd March 2020 when lockdown started.
Watch our quick video to see just how simple your claim could be:
HMRC will then alter your tax code and the result means that less tax will be deducted via the PAYE system by your employer, and your net income will increase over the tax year.
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The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each individual has different circumstances and it is essential that you seek appropriate professional advice before you act on any of the information contained herein. HB Accountants can accept no liability for any errors or omission or for any person acting on or refraining from acting on the information provided in the above