Working From Home and Tax Relief

Since the outbreak of Covid-19, working from home has been the new normal for millions of people across the country.  If you are working from home on a regular basis for either part-time or full-time, you may be able to claim tax relief for additional household costs. This includes if you have to work from home because of coronavirus (COVID-19).

The following guidance is for those who are paid through PAYE.

I work from home, what can I claim?

You may be able to claim tax relief for:

  • gas and electricity
  • metered water
  • business phone calls, including dial-up internet access

You cannot claim for the whole bill, just the part that relates to your work.

You may also be able to claim tax relief on the equipment you’ve bought, such as a laptop, chair, or mobile phone.

What is classed as ‘working from home’?

In 2003 HMRC defined ‘homeworking agreements’ as meeting the following 2 tests:

  • there must be arrangements between the employer and the employee
  • the employee must work at home regularly under those arrangements

The arrangements need not be in writing but usually will be. They do not need to apply to all employees. The exemption does not apply where an employee works at home informally and not by arrangement with the employer.

I have been forced to work from home due to Covid-19, what can I claim?

During the pandemic, HMRC updated their guidance on who can claim tax relief to ensure employees working from home because their employer’s offices have closed or because the employee is self-isolating are included.

How much can I claim?

You can either claim tax relief on:

  • £6 a week from 6 April 2020 (for previous tax years the rate is £4 a week) – you will not need to keep evidence of your extra costs
  • the exact amount of extra costs you’ve incurred above the weekly amount – you’ll need evidence such as receipts, bills or contracts

You’ll get tax relief based on the rate at which you pay tax. For example, if you pay the 20% basic rate of tax and claim tax relief on £6 a week you would get £1.20 per week in tax relief (20% of £6).

What if I work some days in the office and some at home?

If you work from home for an allocation of your working week e.g. you work from home two days a week and in the office three days a week – you can still claim the full £6 a week deduction.

What expenses cannot be claimed?

It is not possible to claim the below expenses for tax relief

  • Mortgage interest of rent
  • Water rates
  • Council tax
  • House insurance
  • Food e.g. lunches

How do I check to see if I can claim?

HMRC has a handy tool you can use to see if you are eligible to claim tax relief. Find it here. 

Here to help

If you would like to chat about your tax or accountancy, please do get in touch. You can contact the team here.

About Graham

Accountant specialising in tax, property, and estate planning. A regular speaker at landlord, property Investor, and later life planning events.

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