Many of us have been confined to our homes since the start of the pandemic. For most office jobs, this has become a new norm. With the advancement of technology, home working most likely will carry on for years to come.
As most people are staying at home, you may have noticed an increase in your utility bills. Since you are at home most of the time, this may not be such a shock. Who should pay for this? After all, it’s not your fault that you have been asked to work from home!
Well, some large companies who have the budget to afford are providing some relief for their employees. However, for most, this is sadly not the case. This is because most businesses in the UK come under the SME remit and therefore do not hold such financial stability to afford such payouts.
Government Announces Tax Relief for Employees
To tackle an increase in home expenses, the UK government has announced a form of tax relief for people who have been forced to work from home, with no choice of their own. COVID-19 has spurred such a trend. However, tax relief for home working is not limited to just the pandemic since this form of tax relief was first introduced in 2003.
I want to emphasise that you will not be eligible for home working tax relief if you have chosen to work from home. (Due to COVID-19, this rule does not apply)
Although due to COVID-19 majority of offices were forced to close, or due to employees following government guidance to self-isolate, tax relief becomes eligible for such incidences. Employees who have become home-based recently will become eligible for the tax relief from the date their employer agreed they could work from home or from the date the initial government advice to work from home was announced in March 2020.
What can you claim for?
There are three main categories for which you can claim tax relief:
– Gas & Electricity
– Metered Water
– Business Phone calls, including dial-up internet access
How much time can I claim for?
As a rule of thumb, if you live and work from home, you cannot claim for the bill in its entirety, just the part that relates to work. However, you’ll be ecstatic to know that In a recent press release published on the 29th of June 2021, HMRC confirmed that even if you have been asked to work from home for one day and the next day your office reponed you can claim tax relief for the entire year from 6th of April 2020 to 5th of April 2021.
HMRC has decided to take a very lenient and fair approach for the tax year 2020/2021 to prevent multiple claims from employees, and also as it was reasonable for employees to claim tax relief due to government guidelines.
Will this relief be there for the tax year 2021/2022?
There is some further good news. It was initially thought that the relaxation of home working tax relief rules would only apply for the tax year 2020/2021. However, it has been reported that this allowance will carry on the same terms for the tax year 2021/2022, as long as the employee was required to work from home during the year 2021/2022. HMRC issued a statement on the 7th of April 2021:
“Employees who may have additional household costs if they have to work at home regularly, either for all or part of the week. This includes having been told to work from home because of coronavirus.” This continues for the year 20201/2022.
How can I claim for home working tax relief?
The claims can be put through the government portal. Alternatively, you can give us a call, and we can help you with your claim.
How much can you claim?
You could claim for the entire tax year 2020/2022 if you were required to work from home.
– Flat Rate of £6 a week – You will not be required to provide any evidence for any extra costs.
– If you much rather provide evidence of extra costs above the weekly amount, you will be required to provide all evidence such as receipts, bills, or contracts.
Tax relief will be based on the tax bracket you are currently on. For instance, if you are a basic rate taxpayer at 20%, you will get £1.20 per week in tax relief (20% of £6). That’s £62.40 (£1.20 * 52) in your pocket.
If you think your expenses were a lot higher than this, it may be worth sending in all evidence to HMRC, who will then calculate how much tax relief you can get.
Tax relief on office equipment purchase?
Generally, employers would be paid for all the necessary equipment required to fulfill their duties, such as a computer, printer, monitor, etc. However, suppose an employee has found themselves in a position to buy the equipment themselves, In that case, employees will have to find out if they can claim tax relief through capital allowances here. If you are still unsure, please do give us a call.
It should be mentioned that even though you might think purchasing office furniture would be classed under home working equipment, it would disappoint you to know that it is not.
As office furniture is merely used to make yourself more comfortable and not perform your actual duties, an employee would struggle to get any form of relief.
If you find yourself struggling to understand or to apply tax relieves available for employees working from home, please do call us, and we will happily go over it with you.