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Working from home is commonplace for some businesses, and second nature for freelancers, sole traders and the self-employed. For some businesses though, remote and home working are still unchartered territory which they are only just starting to explore.

Even HMRC are urging us to claim expenses for working from home, and with greater numbers of employees using personal resources for work, it’s not surprising that you might wonder what tax relief is available for #WFH.

The rise in working from home

The sharp rise in working from home is largely due to the ongoing COVID crisis. 31% of employers in an OwlLabs survey said coronavirus was the trigger for permitting home working in their business.

With its positive impact on staff wellbeing, implementing a home working policy may become key for talent retention. WFH – as the cool kids call it – could soon become the norm.

It might not be a permanent fixture for all roles within a business, and for some it’s just not sustainable. That said, we’re likely to continue seeing more of the world’s workforce logging on from the comfort of home.

Employers are starting to realise the cost-saving benefits of it, too. But, it’s important for employees to know what relief is available to them when working from home, too.

Claiming tax relief for working from home

As of April 6th 2020, employers are able to pay home-working employees a fixed monthly amount of up to £26. Rising from £18 per month in previous years, the payment goes towards any costs incurred by staff having to work from home.

Before drilling down into the detail though, it’s worth mentioning that eligibility is based on a requirement to work from home. Employer contributions and any claims made wont apply to those working from home voluntarily or informally.

This does mean that formal written agreements between the employer and employee will need to be put into place for those working from home in order to qualify for relief of expenses. HMRC considers working from home a formal agreement when it is a set number of days per week.

How to know what you can and can’t claim for when working from home

If the job requires an employee to work from home, there are certain things you can claim relief for. However, you cannot claim for things which overlap across private and business use (such as rent and internet) and would still incur a cost even if the employee weren’t working from home.

So, what can it include? In basic terms, relief can be claimed for costs which an employee incurs as a result of home working. For instance:

Check out our video about the expenses which can be claimed when working from home.


How to claim for relief when working from home

There are actually a couple of ways to reimburse employees for expenses relating to home-working. One of the most popular being the fixed rate employer payments that we mentioned earlier. This method also means that neither the employee nor the employer need to provide a record of this to HMRC.

Alternatively, employees can seek tax relief themselves if their employer chooses not to reimburse their additional expenses. They can do this online, by post or over the phone. Check if you are eligible to claim using the HMRC online tool.

Employees who also submit Self Assessment can claim through their annual tax return. If you’re brand new to Self Assessment, then head over to our guide for more information!

To be eligible, you must have paid tax on your employed income for the tax year that you’re claiming against. The amount of relief is worked out based on how much the employee spent, and the rate of tax they pay.

Talk to one of the team about our professional accounting services, by calling 020 3355 4047, or request a call back when it’s convenient for you.

About The Author

Stephanie Whalley

Serial snacker, compulsive cocktail sipper and full time wordsmith with a penchant for alliteration, all things marketing and pineapple on pizza.

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Liam Yapp
Liam Yapp
17th August 2020 2:17 pm

Awesome article!

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