Working from home tax relief – now you can obtain relief for the whole year!
UPDATE 20 OCTOBER – you can now claim for a whole year’s working from home tax relief even if you are required to work at home for just one day in this tax year (2020/21) by using the government portal.
All you have to do is enter the date you started working from home and you will receive this working from home tax relief at £6 per week for the entire tax year. If you started working from home before the tax year started on 23rd March you will receive an extra two weeks. We explain how much additional money this will put into your pocket below.
Here is the portal link.
In order to qualify you will need to answer the following questions:-
- Do you complete self assessment tax returns? If the anser is YES then you cannot claim via this portal. You will still be able to claim the relief but you will have to do it by claiming when you complete your tax returns. This will normally apply if you have more than one source of income and pay tax at higher rates.
- Has your employer paid your expenses when working from home? If the answer is YES you obviously cannot claim for this relief at all.
- Did you start working from home because of Coronavirus? If the answer to this quesion is NO then there is a check to ensure that you are not claiming for more than 5 different jobs in which case you would have to claim by post (but you can still claim). If the answer is YES then you can use the portal.
You will need to sign up via the Government Gateway so if you have not signed up for that already then you will need to go through the process of verifying your identitly. But once this is done you can use the Government Gateway for all manner of other useful things such as obtaining pension forecasts and checking your tax code so it’s well worth signing up.
On 1st October, HMRC launched a new portal that allows you to claim a special ‘working from home tax relief’. Since then, tens of thousands of people have made claims online.
Given this news, now is a good time to remind you what tax relief is available for people who have to work from home because of coronavirus. We’ll also show you how you can claim it.
Working from home tax relief – what is it?
From 6 April, HMRC has allowed employers to pay their workers up to £6 per week, tax free. This is to help employees cover any extra costs they incur while having to work from home. However, not all employees have given this expense payment to their workers. These people are now able to apply direct to HMRC to receive a ‘working from home tax relief’ instead.
How much can I claim?
You can claim tax relief on £6 per week without having to provide evidence of your extra costs.
The relief you get depends on the rate at which you pay tax. If you are a basic rate taxpayer, you can claim 20% tax relief on £6 per week – or £1.20. If you are a higher rate taxpayer, you can claim 40% of £6 per week – or £2.40.
Over a year, this working from home tax relief can reduce the tax employees pay by £62.50 (basic rate) or £124.80 (higher rate).
If the expenses you accrue from working at home exceed £6 per week, you can still claim for them. However, you will need to provide evidence in the form of receipts, bills or contracts. Allowable expenses include things like heating, metered water bills, home contents insurance, business calls or a new broadband connection. They do not include costs that are unaffected by you working at home, such as mortgage interest, rent or council tax.
How do I claim the relief for working at home?
The first step is to make your claim via the new government portal. You can find this here.
You need to note that you must make the claim yourself. You can’t ask anyone else to do it for you.
When your application is approved, the online portal will automatically adjust your tax code for the year. You then receive the tax relief directly via your salary until March 2021.
If you’re an employer and you’d like advice on either your payroll or on providing expenses payments to employees working from home, please get in touch. We’d be very happy to help.
About Karen Jones
Having worked for one of the world’s largest accountancy firms, Karen Jones uses her tax knowledge and skills to help clients obtain substantial reductions to their tax liabilities.
With an expanding portfolio of tax clients, Karen enjoys the variety her work brings her and particularly likes working with new businesses and people. With a growing number of tax clients, she frequently faces a variety of challenges and relishes the experience she gains as she solves them.
Karen likes the THP ethos: “I like the way the team has a professional, but friendly and down-to-earth approach – it creates a productive atmosphere that benefits everyone.”
Karen’s specialist skills:
- Personal Taxation
- Tax Efficient Planning
- Trust Administration