Post updated: 11 February 2021
With many workplaces following government advice and asking employees to continue to ‘work from home, where possible’, to help curb the impact of coronavirus, millions are still seeing their kitchen tables, spare bedroom or any relatively quiet corner of their homes, as a new office.
Does this mean that anyone working from home is now eligible to claim tax relief on £6 per week?
In short, the answer is yes! Since 2011, employers have been able to make tax-free payments to help employees cover reasonable additional expenses incurred while working from home, but the criteria for employees to be eligible had been quite restrictive.
However, in 2020, HMRC changed its guidance to allow employees to claim a fixed £6 per week for weekly paid employees (£4 per week prior to 6 April 2020) or £26 per month for monthly paid employees (£18 per month prior to 6 April 2020) deduction, for working at home, to cover additional household costs, such as heating, water and electricity. The key difference in the introduction of the new flat-rate is that employers don’t have to justify the amount paid and employees don’t have to detail any additional costs incurred.
In October 2020 HMRC went one step further and launched an online portal offering employees an easy way to claim the tax relief without needing to provide receipts. In line with the frequently-changing guidelines requiring employees to be based in the workplace or at home, HMRC has also removed the need for employees to be home-based for all their working days. If they work part of the week in the office and part at home, they can still claim for the same weekly tax relief.
For basic rate tax-payers (earning £12,500 – £50,000) the relief is worth £20 of the £6 – £1.20 per week. Higher rate tax-payers (earning £50,000+) can claim 40% or £2.40 per week. You can check here if you are eligible to claim.
The good news for employers is that employees can claim the tax-relief themselves via HMRC’s new portal. Employees will just need a Government Gateway ID (which they can create if they have a National Insurance number and a recent payslip, P60 or UK passport).
Our advice for employers, if they have been forced to close their offices (or need to reduce the number of staff in their premises to comply with Covid restrictions) and therefore have asked employees to work from home, is that employees are eligible for the tax-free allowance, from the date it was agreed that they could work from home (or when the government advice was announced). The same applies for any employee who has been self-isolating – and continuing to work – during this period.