Tax Relief for Working from Home: How to Claim and How Much

Working from home
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For years there has been tax relief available to companies who allow their staff to work from home. The costs are to cover the additional expenses for lighting, heating, and electricity used for running computing equipment.

Companies that found themselves having to adapt quickly to rapidly changing work requirements for non-essential staff to work from home weren’t fully aware or knowledgeable around tax exemptions for flexible working and remote working staff.

Employers are not required to meet the additional employee expenses of working from home but can do so. In situations when the employers do not facilitate additional payments to cover staff expenses of working from home, employees are able to claim tax relief of £6 per week or £26 per month.

Employers can choose to meet this payment or advise staff on alternative methods to claim.

How to claim

  • Employees

For employees who do not need to submit a self-employment tax return, i.e., they only work as employees so do no self-employment or do not have other sources of income to report, a claim can be made for the Working from Home tax relief through HMRC at the following website address:

https://www.tax.service.gov.uk/claim-tax-relief-expenses/only-claiming-working-from-home-tax-relief

For those who are required to file a self-employment tax return, the tax relief can be claimed on the self-assessment. There is a section on the form to claim the working from home allowance.

  • Employers

Employers can include the additional payment of £6 weekly or £26 monthly through the payroll without requiring evidence. Employers can choose to pay more than the allowance, however, the maximum that can be claimed per employee is £312 per tax year. This applies to remote working, and employees working flexible hours – some days at home, other days in the office.

Any amounts paid above the allowance will require evidence. This is the same for employees claiming directly through HMRC. Only the equivalent of £6 per week requires no evidence. Should staff ask for more than that, HMRC requires evidence to be shown that proves their expenses have reasonably increased as a result of working from home.

Claims are able to be made for the tax year 2021/22 and can be given for the whole tax year, even if employees return to work before the end of the tax year either full-time or under flexible working.

The same allowance remains in place for the tax year 2020/21. At the time of writing (August 2021) claims are still being accepted for the previous tax year if employees have not yet made the claim.

The £312 allowance for staff working from home applies to all staff, not just full-time. Even if someone only works one day per week from home, the full £312 can be claimed.

What’s it worth?

The total value of tax relief for a basic rate taxpayer is £62.40. Higher rate taxpayers would save £124.80 for each tax year.

Should you require assistance with payroll, tax advice or business advice, contact one of our Chartered Accountants in Solihull by calling our office on 0121 781 7230.

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