HMRC have tax reliefs set up for people who are required to work from home. And during the COVID-19 pandemic, the number of eligible taxpayers has rocketed. But HMRC haven’t recorded a significant increase in the number of claims. Perhaps because people used to being paid through the PAYE system are wary of direct HMRC contact. Maybe they just don’t know the tax relief exists.
What working from home tax relief am I eligible for?
If your employer asks you to work from home, you are eligible to claim tax relief on your increased costs – such as electricity. The reason you are remote working doesn’t matter. It’s not an emergency response regulation that is part of dealing with lockdown. It is part of HMRC’s work expenses and allowances which acknowledge that sometimes taxpayers have to pay for things for work themselves. The accompanying tax relief is the government’s way to rebalance the situation.
How much is working from home tax relief?
You are entitled to a flat rate claim of £6/week. The ‘flat rate’ element means that you can claim this amount without needing to provide any evidence. This doesn’t mean that you get £6 per week back. It means that you can reclaim the tax on £6/week at the rate of tax you pay on your income.
- Basic rate taxpayers pay income tax at 20%. Their tax relief will be £1.20 per week, £62/year.
- Higher rate taxpayers pay income tax at 40%. So their tax relief on this will be £2.40/week or £124/year.
If your costs are substantially more than this, you can make a claim for the actual amount. But this requires receipts, further information and has a more complex application process.
When should I apply?
If you’re one of the people returning to the office this month, now is a good time for you to apply. It means you can include all the months you’ve worked from home at once. If you’re still obliged to work from home, but you expect to be going back in at some point, you might be better to wait until then. You probably won’t get a lump sum, but your tax code will change so that you pay less tax overall during the year. This is also the case if you carry on working from home, so that you don’t have to keep applying for the same tax relief.
HMRC statement: “Employees can claim the P87 expenses at any time but claiming when they return to their place of work means their claim will be for the right amount and they will only have to contact us once.”
Is it complicated to apply?
You can either claim on your self assessment tax return, or using a P87 form (if you don’t file a tax return). You can find this through your Government Gateway account and do everything online. Or you can get a paper copy.
Information you’ll need to apply:
- Your job title
- Employer’s name
- PAYE reference (on P60s and payslips)
- National Insurance Number – only for postal applications.
The section you need to focus on is called ‘Using your home as an office’. In the ‘Amount paid by you’ box, put the total figure of £6 x number of weeks working from home. In ‘Amount paid to you by your employer’ put £0, if you have received no reimbursement of costs or allowance for working from home.
Can I claim for anything else?
That very much depends on your situation. You can definitely backdate many work expenses and allowances tax reliefs by up to four tax years – including working from home. So it might be a good idea to have a little think back. You make one claim, which includes everything, and it can add up to a substantial amount. Things like cleaning your work uniform, professional body and Trade Union fees and mileage are all common claims. And they apply to PAYE, as well as self employed, taxpayers.
So even if you’ve decided a working from home tax relief isn’t for you, you might be able to submit a claim for other entitlements. Can get a bit tricky to navigate all the regulations though, so it’s often wise to seek professional advice to make sure you don’t miss out on anything.