As the COVID-19 pandemic continues to impact the world, many employees in the UK have transitioned to working from home. This change has resulted in additional expenses, such as utility bills and home office equipment, that many workers are now facing.
To help alleviate this financial burden, the UK Government has introduced a Working from Home Tax Relief scheme. In this article, we’ll outline everything you need to know about the scheme, including how to claim up to £140 per year from the government to cover your work-from-home expenses.
What is working from home tax relief?
Working from home tax relief is a scheme that allows individuals to claim tax relief on expenses related to working from home. Originally introduced in 2003, the scheme has been updated to reflect the significant increase in remote work caused by the COVID-19 pandemic.
Under the scheme, individuals can claim tax relief on expenses such as heating, electricity, and broadband, as well as on the cost of things like work phone calls.
This tax relief reduces the individual’s taxable income, meaning they pay less income tax overall. It’s important to note that not all expenses are eligible for tax relief, and certain conditions must be met to qualify for the scheme.
What criteria do I need to meet to claim tax relief for working from home?
To claim tax relief for working from home, you must meet the following criteria:
Your job requires you to work from home
You must be able to demonstrate that you are required to work from home, either by your employer or as a self-employed individual.
You pay higher costs related to working from home
You must be able to show that you are incurring additional expenses as a result of working from home. This can include costs for heating, electricity, and broadband, as well as the cost of equipment such as laptops or office chairs.
Your employer doesn’t pay expenses to cover extra costs associated with working from home
If your employer provides you with an allowance or reimbursement for your work-from-home expenses, you cannot claim tax relief on those expenses.
It’s important to note that not all expenses are eligible for tax relief, and you must keep records to support your claim. Additionally, if you only work from home occasionally, you may not be eligible for tax relief.
How do I apply for working from home allowance?
To apply for working from home tax relief, the UK Government has set up a specific online portal where you can make your claim.
You can find the portal at: www.gov.uk/tax-relief-for-employees/working-at-home.
To claim tax relief, you will need to provide details of your employment or self-employment, and answer a few questions designed to check if you’re eligible. Remember, different eligibility criteria apply depending on the tax year.
Next, you will be asked to provide your Government Gateway ID, or take a few minutes to create a new one, in order to make a claim. You will be asked to provide some details, including when you started working from home, as well as the period you are claiming for.
If you normally complete a self-assessment tax return, you can’t use the HMRC portal to make a claim. Instead, you will need to claim via your usual tax return.
How much money can I claim in working from home tax relief?
If you meet the eligibility criteria for working from home tax relief, you can claim a flat rate of £6 per week.
How much tax relief that equates to over the course of a year depends on your tax code and what level of tax you are paying.
Basic rate taxpayers
If you are a basic rate taxpayer, you can claim tax relief on £6 per week, which adds up to £1.20 per week. This equates to a total tax relief of £62.40 per year.
Higher rate taxpayers
If you are a higher rate taxpayer, you can claim tax relief on £6 per week, which adds up to £2.40 per week. This equates to a total tax relief of £124.80 per year.
Additional rate taxpayers
If you are an additional rate taxpayer, you can claim tax relief on £6 per week, which adds up to £2.70 per week. This equates to a total tax relief of £140.40 per year.
It’s important to note that you can only claim tax relief on the additional expenses you have incurred as a result of working from home, and you will need to keep records like bills or an employment contract in order to support your claim.
What can I claim tax relief for?
If you are eligible for working from home tax relief, you can claim tax relief for a range of additional expenses that you have incurred as a result of working from home. Some of the expenses you can claim tax relief for are listed below.
Work calls
If you make phone calls for work using your personal phone, you can claim tax relief for the cost of those calls.
Energy for your work area
You can claim tax relief for the additional cost of heating and lighting your home office, as well as any other costs associated with running your work area, such as the cost of charging your laptop or using a printer.
Additional household costs
If you are required to work from home in your role, you may also be able to claim tax relief for any extra costs incurred by your work practices.
Can you backdate working from home tax relief?
Yes, if you pay tax in the UK you are able to make a backdated claim for working from home tax relief.
You have until April 5th, 2025 to make a claim for the tax year 2020-2021, and until April 26th, 2026 to claim for the year 2021-2022.
This means that if you have been working from home and incurring additional expenses since April 2020, but you haven’t yet made a claim for tax relief, you can still make a claim and receive a lump sum payment home tax rebate for any successful backdated claims.
You can make backdated claims via the HMRC portal: www.gov.uk/tax-relief-for-employees/working-at-home.
How is working from home tax relief paid?
Working from home tax relief can be paid in one of two ways, depending on your circumstances.
Your employer pays it via your salary
If your employer agrees to cover your work-from-home expenses, they can pay you a tax-free allowance of up to £6 per week. This means that the tax relief is paid directly to you, as part of your salary, and you won’t have to claim it from HMRC.
You can claim it from HMRC
If your employer does not provide you with an allowance to cover your work-from-home expenses, you can claim it as tax relief from HMRC. The amount is deducted from your taxable income, and you can then claim it directly from HMRC.
