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Were you one of the many employees who claimed homeworking expenses during the coronavirus pandemic? If so, you should know that the temporary tax relief rules ended in April 2022, and stricter pre-pandemic rules have been in place ever since. As hybrid and remote working continue to evolve, it’s important to reassess whether you can still claim homeworking expenses today.
During the pandemic, many employees were able to claim tax relief on homeworking costs due to lockdowns and workplace closures. However, those temporary reliefs are long gone, and HMRC now applies the original, more restrictive pre-pandemic rules. This means that, in most cases, employees working from home voluntarily will no longer qualify for tax relief on homeworking costs.
Many workplaces have since adopted permanent hybrid or remote working models, but that doesn’t automatically mean you can claim expenses. Let’s break down the current rules.
There are two key scenarios to consider:
Employees can only claim tax relief on homeworking costs in very limited circumstances. You must meet all of the following conditions:
If you have a voluntary work-from-home arrangement and are not being reimbursed by your employer, you are unlikely to qualify for tax relief under these rules.
If you do meet the criteria, you can still make a claim via your Self-Assessment tax return or HMRC’s online claim service. If approved, HMRC typically adjusts your tax code to provide the relief in your salary.
Your employer can choose to reimburse some or all of your additional homeworking expenses through payroll. This can apply to both fully remote and hybrid workers, as long as homeworking is regular and follows a pattern (e.g., two days per week). The key difference here is that tax relief does not apply—instead, it’s a direct employer reimbursement.
For these payments to be tax-exempt, you must:
Casual homeworking—such as answering emails in the evening—does not qualify for tax-free reimbursements.
There are two main ways employers can reimburse homeworking costs:
Employers can pay a tax-free flat rate of £6 per week (£26 per month, £312 per year) without needing receipts or additional evidence. Hybrid workers are also eligible for the full £6 per week, without needing to prorate the amount.
Instead of the flat rate, employers can reimburse additional home costs such as:
To qualify, employees must provide evidence of the increase in costs due to homeworking. However, fixed expenses such as rent and council tax cannot be included. Given the complexity of proving exact increases, many employers prefer using the flat rate instead.
The pandemic-era relaxation of home office equipment rules is no longer in effect. The tax treatment now depends on who pays for the equipment:
✅ If you have a formal homeworking arrangement, your employer can reimburse homeworking expenses tax-free. ❌ If your homeworking costs are not reimbursed, claiming tax relief from HMRC is only possible in very limited circumstances where homeworking is a necessity. ❌ Reimbursed equipment expenses are taxable unless directly provided by your employer. ✅ You may still claim tax relief on personally purchased necessary work equipment—but only for essential items like computers, not office furniture.
f you’re unsure whether you can claim homeworking expenses, check HMRC’s latest guidance or speak to one of our qualified accountants for tailored advice. Get in touch with us today to discuss your situation and ensure you’re making the most of available tax reliefs.
The UK’s Making Tax Digital (MTD) initiative is set to transform the way businesses and landlords handle their tax affairs. From April 2026, the new rules will apply to sole traders and landlords with an annual income of over £50,000, with those earning over £30,000 following in April 2027. These changes mark a significant shift towards digital record-keeping and more frequent tax reporting. It is important to bear in mind that if you are both a landlord and a sole trader, your total income from both sources will be combined and assessed against the £50,000 and £30,000 thresholds.
A crucial aspect of MTD is determining who needs to comply, which is based on the qualifying year. HMRC has confirmed that the 2024/25 tax year will be used to assess whether landlords and sole traders meet the income thresholds. This starting list will define those required to comply when the rules come into effect.
It is important to clarify what HMRC considers as ‘income’ in this context. Income refers to the total revenue before the deduction of expenses, not the profit after expenses. For landlords, income is not the amount received in their bank account after deductions, but rather the gross rental income before expenses, service fees, commissions, and other deductions. Similarly, for sole traders, income refers to total turnover before any business expenses are subtracted.
If your combined income from self-employment and property rentals has already exceeded £50,000 in the 2023/24 tax year, you must start preparing now for this change. Ensuring that your records, accounting software, and reporting processes align with MTD requirements will help make the transition smoother and avoid compliance issues.
Making Tax Digital is a government-led initiative aimed at modernising the tax system by transitioning from traditional annual tax returns to a more dynamic, digital model. The goal is to reduce errors, improve efficiency, and provide taxpayers with a clearer, real-time view of their financial obligations.
This is an evolving topic, and HMRC continues to refine its approach to MTD for ITSA. We are keeping a close eye on developments and will provide further guidance as more details become available.
The MTD requirements will apply to:
With the transition to MTD approaching, it’s crucial to start preparing early. Here are some practical steps to get ready:
Our team at CooperFaure is here to support you every step of the way. We offer:
Avoid the last-minute rush—get your business ready for these substantial changes now! If you have any questions or would like to discuss how MTD might affect your business or rental income, use the link below to set up a meeting with us.
📅 Schedule Your MTD Consultation
We’re here to make this transition as smooth as possible for you!
Navigating the world of taxes can be daunting, especially if you’re new to the process or if your financial circumstances have changed. It’s important to understand when you are required to file a tax return to stay compliant with HMRC guidelines and ensure you are managing your finances effectively. This guide will walk you through the basics, ensuring an easy read for those who are not tax experts.
Generally, you will need to submit a tax return if one or more of the following apply to you:
If you’re filing your tax return for the first time, the process may seem intimidating. Here are the steps you should take:
If you’ve filed tax returns in the past but then stopped because your situation changed (e.g., you became an employee and were taxed through PAYE), you might wonder if you need to file again. Here are a few scenarios where you should consider filing a tax return:
By keeping track of changes in your income and employment benefits, you can ensure that you remain compliant with HMRC regulations and avoid any unexpected tax bills. Remember, if your income or circumstances change significantly, it’s a good idea to reassess your tax filing needs.
Tax can be complex, and circumstances can change year by year. If you’re unsure about whether you need to file a tax return or if you need help with the process, don’t hesitate to reach out. Contact us at personal.tax@cooperfaure.co.uk, and let our experts provide you with tailored advice and support.
Remember, staying proactive about your tax obligations ensures you remain compliant and can avoid potential penalties. Let us help you manage your tax commitments with ease.
The Chancellor of the Exchequer Jeremy Hunt delivered his Spring Budget 2024 on Wednesday, March 6, 2024. He announced a series of tax cuts and spending plans that aim to boost the UK economy and ease the pressure on households and businesses. Here are some of the key points from the budget and how they may affect you.
The main rate of employees’ National Insurance contributions (NICs) will be reduced from 10% to 8% from April 2024, benefiting around 27 million workers with potential savings of up to £450 per year. The main rate of Class 4 NICs for the self-employed will also drop from 9% to 6% from April 2024, a further reduction after the abolition of Class 2 NICs. This means that the self-employed will pay the same rate of NICs as employees on their profits above the lower profits limit of £9,568.
The higher residential property Capital Gains Tax (CGT) rate will be reduced from 28% to 24% from April 2024. This will apply to gains from the sale of second homes and buy-to-let properties. The basic rate of CGT for residential property will remain at 18%. The annual exempt amount for CGT will also remain at £12,300 for individuals and £6,150 for trusts.
The stamp duty relief for buying multiple homes at once, known as Multiple Dwellings Relief (MDR), has been scrapped from June 1, 2024. This means that buyers of more than one property in a single transaction will have to pay higher rates of stamp duty on each property, regardless of whether they are residential or non-residential. The higher rates are 3% on top of the normal rates for properties up to £500,000, 8% for properties between £500,001 and £925,000, 13% for properties between £925,001 and £1.5 million, and 15% for properties above £1.5 million.
The furnished holiday lettings (FHL) regime will be abolished from April 2025. This means that FHLs will no longer be treated as a separate category of property income for tax purposes. Instead, they will be taxed as normal rental income, subject to the same rules and allowances as other landlords. This will affect the eligibility for certain reliefs and deductions, such as capital allowances, loss relief, and CGT rollover relief.
The non-dom tax status will be removed in April 2025. This means that foreign nationals residing in the UK but officially domiciled overseas will no longer be able to avoid paying UK tax on their foreign income or capital gains. Instead, they will be taxed on their worldwide income and gains, regardless of whether they remit them to the UK or not. A more ‘straightforward’ residency-based system will be implemented in 2025, with details to be announced later.
The high-income child benefit charge threshold will be raised from £50,000 to £60,000 and the taper – which applies when an individual’s income increases beyond the threshold of £60,000, meaning they will gradually lose eligibility for child benefit – will extend up to £80,000. No one earning under £60,000 will pay the charge, taking 170,000 families out of paying it altogether. And because of the higher taper and threshold, nearly half a million families with children will save an average of around £1,300 next year.
Businesses can expect full expensing to be extended to include leased assets in the future, with the Chancellor announcing he will publish draft legislation to cover this extension. This will allow businesses to deduct the full cost of leasing certain assets from their taxable profits, rather than spreading the deduction over the lease term. The types of assets that will qualify for full expensing are yet to be confirmed.
The VAT threshold for small businesses has been increased from £85,000 to £90,000 from April 2024. This means that approximately 28,000 small businesses will drop below the threshold for paying VAT. The registration and deregistration thresholds for VAT will be frozen until April 2027.
Fuel Duty has been frozen for an additional 12 months and the 5p cut to petrol taxes that was introduced in 2022 remains in place. This will benefit motorists and businesses that rely on road transport.
The Spring Budget 2024 has introduced a number of tax changes that will have a significant impact on individuals and businesses. Some of the main winners are employees, self-employed, and property sellers, who will benefit from lower NICs and CGT rates. Some of the main losers are property buyers, FHL owners, and non-doms, who will face higher stamp duty, income tax, and CGT liabilities. Businesses will also see some changes to their tax treatment, with some positive measures such as full expensing and higher VAT threshold, and some negative ones such as the removal of MDR and FHL regime.
If you have any questions about how the Spring Budget 2024 affects you or your business, please contact us for expert advice and guidance.