With an increasing necessity to work away from the office, it is helpful to understand the tax relief available if employees are required to work from home on a regular basis, either for all or part of the week.
HM Revenue and Customs (HMRC) have launched an online portal to enable eligible employees to claim tax relief on working from home. This relief applies only during the current coronavirus pandemic and is not a permanent change to the amount of tax relief available for home working.
Following a successful online application for tax relief, the employee’s tax code will be adjusted for the 2020 to 2021 tax year. The employee receives the tax relief directly through their salary and will continue to receive the adjustment until March 2021.
How much tax relief can be claimed?
The tax relief employees can claim:
- £6 a week / £26 a month from 6 April 2020 (for previous tax years the rate is £4 a week);
- This does not require the employee to provide evidence of their additional home-working costs, unless they are applying for tax relief on costs above the £6 per week flat rate; and
- The £6 a week / £26 a month is available in full, even if an employee splits their time between home and office – it does not need to be pro-rated over the number of days spent each week in the home and in the office.
Tax relief will be at the rate the employee pays tax, for example:
- If they pay the 20% basic rate of tax and claim relief on £6 a week, they will receive £1.20 per week in tax relief (20% of £6);
- Higher rate taxpayers would therefore receive £2.40 a week (40% of £6 a week); and
- This means that if an employee has to work the whole tax year from home (from 6 April 2020 onwards), they could reduce the tax they pay by £62.40 or £124.80 respectively.
Are all employees eligible?
The tax relief is available for employed workers that have been told to work from home by their employer to help stop the spread of coronavirus.
How do employees claim the allowance?
A new online government portal has been launched to enable employees that have not received the working from home expenses payment direct from their employer to apply for the relief from HMRC.
Employees claiming tax relief for working from home can apply directly to HMRC using this link.
What do employees need to do to claim the tax relief?
- To claim the tax relief, employees will need a Government Gateway user ID and password;
- If employees do not already have a Government Gateway ID they can create one by following this link;
- Once they have clicked on the link, they should select “Create an account” at the bottom of the page; then
- Select the ‘Choose Government Gateway” button;
- Employees will need their National Insurance number and one of either a recent payslip, P60 or a valid UK passport.
Employees will only be able to claim using their Government Gateway online account.