Work From Home Tax Relief

Table of Contents

Overview of tax relief on work from home:

Working from home? Don’t forget to claim tax relief on additional household costs. Additional costs include heating, metered water bills, business calls, new broadband connection etc. They do not include mortgage interest, rent, council tax or any other cost which that would stay the same whether you were working at home or in an office.

From 6 April 2020, employers have been able to pay employees up to £6 a week tax-free to cover additional costs if they have had to work from home. Employees who have not received the working from home expenses payment direct from their employer can apply to receive the tax relief from HMRC.

If you have bought an equipment specifically for work purpose, such as computer, laptop, tablet, chair etc., you may also be able to claim tax relief on equipment you have bought.

How much tax relief on work from home can you claim?

You can either claim tax relief on work from home on:

  • £6 per week from 6 April 2020 (£4 for previous years). You are not required to keep any evidence for the additional household costs.
  • the exact amount of additional household costs which you have incurred above the weekly amount. You are required to keep any evidence for the additional household costs.

Eligible taxpayers can claim tax relief based on the rate at which they pay tax. For example, if an employed worker pays the 20% basic rate of tax and claims tax relief on £6 a week, they will receive £1.20 a week in tax relief (20% of £6 a week) towards the cost of their household bills.

Higher rate taxpayers would therefore receive £2.40 a week (40% of £6 a week). Over the course of the year, this could mean that basic rate taxpayer can reduce their tax by £62.40 and higher rate tax payer by £124.80

Check here if you can claim tax relief on work from home.  

What if my costs are higher than £6 per week?

It is quite possible that your additional household costs incurred due to work from home are higher than £6 per week. If so, you can apply for tax relief on higher amount. Although it would not be as straight forward as claiming relief on the portal.

If you do submit your personal self-assessment tax return, you can simply add the claim to your return. If you do not submit self-assessment tax return, HMRC has a Form P87 – that allows employees to claim back expenses up to a maximum of £2,500.

Be aware you will have to demonstrate these extra costs and back them up with receipts. Most people will probably decide that the £6 a week, no-receipt claim is the easier option.

How to claim tax relief on work from home?

Launched on 1 October, the online portal has been set up to process tax relief on additional expenses for employed workers who have been told to work from home by their employer to help stop the spread of coronavirus.

Once the application has been approved, the online portal will adjust an individual’s tax code for the 2020 to 2021 tax year. The employee will receive the tax relief directly through their salary and will continue to receive the adjustment until March 2021. Employees could alternatively receive the tax relief as a lump sum payment if they wait and apply once the 2020 to 2021 tax year has ended.

Other points to consider:

– You cannot claim tax relief on the costs of working from home if your employer has paid back your expenses or paid you an allowance to cover your expenses.

– You can only claim tax relief on your expenses for working from home if you do not complete your personal Self-Assessment tax return. If you do, you must claim these expenses as part of your Self-Assessment tax return 

– If your claim is for the current tax year, HM Revenue and Customs (HMRC) will usually make any adjustments needed through your tax code. If your claim is for previous tax years, HMRC will either make adjustments through your tax code or give you a tax refund.

Work from home tax relief
Work From Home Tax Relief

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