Working from home tax relief came about due to the pandemic and millions of people being told by their employers to work from home. During this time, HMRC put a scheme in place to help employees cover extra costs that arose from working from home (WFH). A designated portal was set up where workers could (and still can!) claim different types of working-from-home expenses.
What is the deadline to apply for Working from Home Tax Relief?
Employees can still apply for the rebate if they worked from home during the 2020/21 and 2021/22 tax years. HMRC’s online portal is still up and running and will continue to be so until the 5th of April 2025 for 2020/21 tax year claims, and the same date in 2026 for 2021/22 claims.
What about 2022/2023 tax year? Can employees claim for this year too?
From the current tax year 2022/23 onwards, employees who are eligible can still make a claim for tax relief for working from home. The claim can be made in self-assessment (SA) returns, online, or on a paper P87 form. The amount that can be claimed is £6 per week (£26 per calendar month), or actual evidenced amounts incurred on electricity and gas relating to the work area and business phone calls, as a deduction against earnings in respect of the weeks worked from home.
What costs can be included?
Employees can raise a claim for the following costs:
- heating
- metered water bills
- contents insurance
- business calls
- new broadband connection.
Fixed costs that would stay the same regardless of whether someone worked at home or an office – e.g., rent, mortgage payments – are not applicable.
How can employees claim relief?
There are two ways for employees to claim relief: The first is through you, the employer, who can cover the cost of working from home by paying these into wages tax-free. Alternatively, employees can raise a claim directly with HMRC. This is a better option for your business as HMRC will foot the cost instead. Regardless of which option your workers go for, they can’t choose both. In other words, employees cannot claim relief if you, as the employer, pay off these expenses.
How much tax relief are employees entitled to?
Put simply, if employees claim the relief through HMRC, the amount an employee can receive will depend on the rate of income tax they pay: Those in the 20% bracket will get £1.20 a week. Higher-rate taxpayers on %40 will get £2.40 a week. Taxpayers in the highest bracket can get £2.70 a week.
How much you can 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, or, the exact amount of extra costs you’ve incurred above the weekly amount – you’ll need evidence such as receipts, bills contracts. You’ll get tax relief based on the rate at which you pay tax. Example If you pay the 20% basic rate of tax and claim tax relief on £6 a week, you will get £1.20 per week in tax relief (20% of £6).
Who is eligible for relief?
While both part-time and full-time employees can apply, not everyone can claim working from home expenses accrued during the pandemic. Those who made a conscious choice to work from home, for instance, don’t qualify.
Who is not eligible for relief?
You cannot claim tax relief if you choose to work from home.
This includes if:
- your employment contract lets you work from home some or all the time.
- you work from home because of COVID-19
- your employer has an office, but you cannot go there sometimes because it’s full.
