If your employer requires you to work at home, you can – and always have been able to – claim for increased costs due to working from home, eg, heating and electricity.
Clearly, right now many firms have closed workplaces (again) and that means across the UK millions of staff are temporarily required to work from home, even if it's just for part of the week. Therefore you're eligible to claim if you've had increased costs due to it. HM Revenue & Customs (HMRC) has specifically confirmed that claims from employees working at home due to coronavirus measures if their usual workplace is closed, count.
But apportioning extra costs such as heating and electricity is tough. So instead you can, in simple terms, claim a rate of £6 a week. There are two ways to do this:
Employers can pay you £6 a week extra tax-free. Employers can give you an allowance up to this amount and what they give you is free from tax, so you get it all (to give you more, you will need to make special arrangements). But right now – with many firms struggling – asking may be bad timing, so instead you can...
Claim tax relief on £6 a week. If your employer won't pay expenses for your extra costs due to necessary working from home, but you have them, then you can ask for the amount to be deducted from your taxable income. To make the process easy, HMRC says that claims in line with the employers' payment (ie, for £6 a week) will not need to justify that figure – meaning you won't need to keep receipts or prove information. Tax relief of £6 a week equates to a gain of £1.20 a week for a basic 20% rate taxpayer, £2.40 a week for a higher 40% rate taxpayer. If you believe you have higher increased costs than £6 a week, you can claim more, but you will need evidence of the cost increases and be able to apportion these specifically to the fact you are working from home – and this becomes a much more laborious process.
In Oct 2020, HMRC changed the system so you get a whole year's relief, for the last 2020/21 tax year only, you only need to claim once, and you automatically get it claimed for ALL of the tax year at the £6/week relief rate. That's a gain of £62/year for basic rate taxpayers, £124/year at the higher rate. So if you have had to work at home at any point from 6 April 2020 - 5 April 2021 and you have higher costs due to it, no need to delay, claim immediately.
What if you're only required to work at home part-time?
Many offices and places of work have been reopening (and closing, and reopening...), but to ensure they are Covid safe, fewer employees can go into the premises at any one time. Often this is done by allowing different employees to come in on different days, and stay at home on the rest.
HMRC has confirmed to us that as long as you are required to work at home and have additional expenses due to it, even if...
- It is only working from home part-time - Others are going into work - You are only needed to work at home, say, one day in five and were in the office the rest of the week
... you can still claim the full £6 allowance (whether as a payment from your firm or as a tax break) and you too can claim for the entire 2020/21 tax year.
If a couple both work from home, can they both claim it?
The working-from-home tax relief is an individual benefit. So if you've had an increase in costs because you're required to work from home, you can claim it. If two or more of you live in the same property, you're all required to work from home and it's fair to say that costs have increased specifically from each individual working from home, then you can all claim it.
How to claim the tax relief
To process these claims, in October 2020, HMRC set up a new dedicated working-from-home microservice that will automatically apply the whole 2020/21 tax year's relief via your tax code – making claiming the whole amount very easy. Anyone making a claim for this tax year, who hasn't already put in a claim, can use it.
In fact, you can actually use it to claim just a smidge before this tax year too. You can use it to make a claim since lockdown started on 23 March 2020 – just put that date in. Do that and you'll get a refund for the whole of this tax year (which started 6 April 2020) and two weeks extra on top.
You'll need to have your Government Gateway ID to do it. If you don't have one, you can create one as part of the process.
Don't expect to receive a cheque for this money though. It is done by altering your tax code, which is what indicates to your employer how much tax to take off your payslip – it should be amended in your personal tax account within a couple of days. The result will be less tax taken off each month for the rest of the year which means you'll take home more.
If you need help to understand this our dedicated accountant is here to walk you through the process. Contact our team on 079 506 98462 or book a free consultation to talk to one of our accountants.