{"id":4283,"date":"2020-05-01T15:11:26","date_gmt":"2020-05-01T15:11:26","guid":{"rendered":"https:\/\/www.georgehay.co.uk\/blogs\/?p=4283"},"modified":"2023-11-17T16:51:26","modified_gmt":"2023-11-17T16:51:26","slug":"home-working-and-tax-relief-on-expenses","status":"publish","type":"post","link":"https:\/\/www.georgehay.co.uk\/blogs\/2020\/05\/home-working-and-tax-relief-on-expenses\/","title":{"rendered":"Home working and tax relief on expenses"},"content":{"rendered":"

In recent years, home working has become increasingly popular. Since\u00a0the Coronavirus outbreak, it has effectively become the norm for millions of people.<\/p>\n

If you \u2018require\u2019 your employees to work from home, they can \u2013 and have always been able to \u2013 claim for the increased costs associated with doing so (i.e. electricity and heating).<\/p>\n

Employers can choose to reimburse employees for the increased costs they incur. However,\u00a0if they do not wish to, the employee will need to approach HMRC and make a claim for the tax relief.<\/p>\n

HMRC will consider claims from employees working at home due to the restrictive measures put in place in response to Coronavirus, if their usual place of work is shut.<\/p>\n

Choosing to reimburse your employee<\/h5>\n

From 6 April 2020, employers can pay eligible employees up to \u00a36\/week (\u00a326\/month) to cover additional costs associated with home-working. This allowance will not be subject to income tax or National Insurance for the employee. For previous tax years, the rate is \u00a34 a week (\u00a318 a month).<\/p>\n

To be eligible, the employee must be regularly carrying out the some or all duties of their employment from home. Irregular or informal home-working arrangements do not qualify.<\/p>\n

During the current COVID-19 pandemic, HMRC will accept that employees working from home, based on government advice or because their workplaces are closed, meet these requirements.<\/p>\n

If\u00a0your employee has voluntarily agreed or chosen to work from home, they are ineligible to make a claim for the tax relief from HMRC.<\/p>\n

What costs can the payments cover?<\/h5>\n

Paying the flat rates means the employer does not need to justify the expenditure. Additionally, the\u00a0employee does not need to keep records of their additional costs. Employers can pay a larger tax-free amount, subject to provision of evidence for the additional costs.<\/p>\n

Only the increase in costs incurred by the employee can be reimbursed. Costs that would be the same whether you work at home or not, or those that existed before the home-working started, cannot be included. For example you are not likely to be able to claim back broadband costs as most people are on a fixed contract, but you could claim for excess data usage if you are charged by your provider.<\/p>\n

Additionally, employers cannot reimburse tax-free any costs that put the employee in a position to work at home such as building alterations. However, the employer can provide office equipment and office furniture. These would be tax-free benefits in kind.<\/p>\n

Employees claiming from HMRC<\/h5>\n

Employees can submit claims to HMRC for tax relief on home-working expenses, which is deducted from taxable income.<\/p>\n

Claims in line with the employers’ payment (i.e. for \u00a36\/wk) will not require evidence. The impact of a \u00a36\/wk claim is a gain of \u00a31.20\/wk (about \u00a362\/year) for basic 20% rate taxpayers. Higher 40% rate taxpayers will gain \u00a32.40\/wk (about \u00a3124\/yr).<\/p>\n

More detailed guidance can be found in the Government\u2019s employment income manuals:<\/p>\n