Did you know that if you’ve worked from home, even for one day, since the beginning of the coronavirus pandemic you can claim tax relief for the full year? And luckily, it’s been made easier to claim through the new government microservice.
In this blog post, we discuss who’s eligible, how much you could be entitled to, and how you can go about claiming the tax relief available – plus, the good news is, that it only takes five minutes to make a claim.
What is the Working from Home Tax Relief?
Throughout to Coronavirus pandemic, businesses all over the UK have had to close their doors (and reopen them, and close them again) and where possible, let their employees work from home to continue with business operations during the lockdown.
Although working from home does save money on transport costs, it does mean you’re likely needing to fork out more for utilities such as gas, electric and water, contents insurance, business calls, a new broadband connection or stationery. Therefore, the tax relief put in place allows you to claim money back for these additional expenses.
How Much Tax Relief Can I Claim?
You can claim tax relief either worth up to £60 or £125, depending on the rate of income tax you pay.
If you pay the standard 20% basic tax relief, you will receive £1.20 a week (20% of £6) or £60 a year. If you pay the higher tax threshold of 40%, you will receive £2.40 a week (40% of £6) from the date you started working from home.
However, if your employer chooses to give you a ‘working from home allowance’ you would £6 a week tax-free.
If the £6 a week tax rebate doesn’t cover all the costs you’ve incurred, it is possible to claim for more, but you will need to provide evidence of this, such as your changes to your bills and other monthly expenses as a result of working from home. Additionally, if you live with your partner, you can both make a separate claim, as it’s an individual benefit.
But I’ve Not Been Working from Home for the Full Year?
This is where it may sound a little too good to be true, but it doesn’t matter if you’ve only worked at home for one day or every day throughout the pandemic.
In an interview with the Money Saving Expert, Martin Lewis, HMRC explained the reasoning behind offering the tax relief: “We recognise that the working-from-home situation is very fluid this year, so we’re accepting claims for the full year’s expenses. Even if people have only worked from home for some of the year, to avoid needing to contact us if you have to work from home again.”
How Can I Claim the Coronavirus Tax Relief?
In October 2020, HMRC launched their new microservice which made it even easier to claim back the tax relief.
There are some questions you will need to answer to ensure you’re eligible. However, you should only be able to claim if you:
- Are only claiming expenses for working from home,
- Do not pay tax by self-assessment,
- Have not had your expenses already paid by your employer,
- Have only encountered higher costs since working from home,
- Have only started working from home due to the pandemic as you cannot claim tax relief if you choose to work from home, only if you’ve been required too.
To make a claim, you will need your Government Gateway user ID and password – but don’t worry you’ll be able to create one if you’ve not yet done so or reset your username and password if you’re uncertain of your details.
You also need to be aware of that date you started working from home, but you don’t need to worry about when you’ll be going back into the office. If you started working from home before the start of the 2020-21 tax year, you’ll also be owed this tax-relief too.
If your claim is successful – which you can track through your government gateway account – your PAYE tax code will change, and you’ll be able to earn more before your tax payments begin.
If you’d like to claim tax relief for the costs you’ve occurred since working from home, follow this link to get started: Tax Relief For Employees: Working At Home.