At CooperFaure, we are nearing the tenth week of switching to a remote working model with the team working from home since the office was closed in response to COVID-19 on 16th March . We know that that this is the case for millions of employees up and down the country.
There is a cost to working from home and, understandably, in many cases, employers are not in a position to cover these costs.
In response to this, last week HMRC updated the guidance in their Employment Income Manual to say that, from 6th April 2020, it will accept that employees who are required to work at home can claim a deduction of £6 per week or £26 per month to cover the additional costs of incidentals such as light, heat and water without having to support the claim with receipts. For previous tax years, the rate has been set at £4 a week or £18 a month.
Rishi Sunak is currently evaluating increasing the amount for the 2020-21 tax year to £50 per month in light of evidence that the average actual extra costs are in excess of the current allowance.
In addition, tax relief is available for the full cost of items that an employee has purchased to facilitate home working such as an office desk, chairs, filing cabinets, bookcases, stationery and printer ink along with the actual cost of business telephone calls.
HMRC will not accept claims for costs that are not exclusively for work purposes such as broadband, insurance and clothing costs.
In theory, there is the ability to claim tax relief on the full cost of substantial equipment that an employee has had to purchase such as a laptop or printer. However, HMRC may challenge whether the purchase is exclusively for work purposes and, if so, this would have to be evidenced.
It is important to emphasize that the tax relief is only available where there is no alternative to working from home, such as office closure due to COVID-19, rather than where an employee chooses to do so.
For employees not required to submit a personal tax return and with a total claim of under £2,500.00 in a tax year, you can start the application process here.
Assuming that you meet the eligibility questions, HMRC will direct you to create a Government Gateway User ID and password. This process takes roughly ten minutes and you will need your National Insurance number and either a recent payslip or P60 or a valid UK passport.
For those employees who are submitting personal tax returns, the claim will need to be included as part of the tax return process.
Employees who have a claim in excess of £2,500 in a tax year will need to register to submit personal tax return here.
Whilst we recognise that these are not huge sums, a standard rate taxpayer with £1,000 of expenses will get £200 of relief, these are an entitlement. As the Tesco’s tagline says ‘Every Little Helps’.
We will continue to report any developments as they come through. In the meantime, please email email@example.com if you have any questions or would like any other information.