If you are required to work from home, including due to the COVID-19 pandemic, you can claim for the increased cost of things such as internet, phone bills and equipment for the time you spend at home. While the working from home allowance is not new, the rules have changed slightly and more people may be eligible as a result of the lockdown restrictions.
Change to the working from home tax relief rules
Many businesses had to close workplaces due to the pandemic, requiring millions of people across the UK to work from home. As a result, HMRC confirmed that employees working from home qualify for the tax relief if their workplace is closed. In 2020, HMRC also launched a microservice to help people claim the tax relief online. Even if you only worked from home for a single day, you could still claim a whole year’s worth of tax relief for 2020/21. The same rules apply for the 2021/22 tax year.
Who can claim working from home tax relief?
If you incur additional household costs when working from home (such as electricity, heating and metered water) you are eligible to claim tax relief. You can also claim if you have had to purchase any equipment for working from home, for example a chair, desk, laptop or phone. Working from home tax relief is available to those who are required to work from home because they have been told to self-isolate or the workplace is closed.
It’s important to note that if you choose to work from home but your employer does not require you to do so, then you will not be eligible for this tax relief.
How much tax relief can I claim?
While you can claim for household expenses related to your work, you cannot claim the tax relief for the whole cost of the bills, only the specific part that relates to working from home.
You have two options for claiming working from home tax relief. You can claim either:
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- A flat rate of £6 a week from 6 April 2020. If you choose to claim the flat rate, you do not need to keep evidence of specific costs.
- The exact amount of extra costs you have incurred. This can be complicated to quantify, and you will need to keep evidence such as bills, contracts and receipts.
The amount of tax relief you receive will be based on the rate of tax you pay. For the flat rate of £6 per week, the rates are as follows:
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- For a basic 20% rate taxpayer - £1.20 a week
- For a higher 40% rate taxpayer - £2.40 a week
- For a top 45% rate taxpayer - £2.70 a week
Personal Tax Advice, Edinburgh
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