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Tax Relief Working From Home

As a result of COVID-19

The impact of the COVID-19 pandemic has been changing the way people work since March 2020.

As an employee required by your employer to work from home, you could claim tax relief on the additional costs of heating and lighting incurred as a result of doing so. The effect of the pandemic has meant that many more employees were required to work from home between 2020 and 2021.

As an emergency financial response, HMRC allow employers to pay those working at home, a tax- free payment of £6 per week. If an employer is unable or unwilling to make such a payment, the employee can make a claim for the £6 per week to be deducted from their taxable income.

If you were required to work at home at any time during the tax year ending 5 April 2021 as a result of the pandemic and haven’t been reimbursed by your employer, you can obtain tax relief of £62 per annum if you’re a basic rate taxpayer and £124 per annum if you’re a higher rate taxpayer.

In October 2020 HMRC set up an online facility for employees to be able to claim this tax relief. Having made an eligible claim an employee could expect to see a change in his/her tax code to enable a tax refund to be made to them via their weekly or monthly pay packet.

Here’s the link to the HMRC ‘microservice’ for you to make a claim if you haven’t already done so: https://www.tax.service.gov.uk/claim-tax-relief-expenses/claim-online

Tax Relief Working From Home FAQs

Before you launch into your online claim here are some common issues raised which may be relevant to your situation.

Yes. You can still claim the £6 per week allowance even if you worked at home on a part-time basis.

In that case you’ll have to provide HMRC with evidence of having higher bills and other outgoings as part of a formal claim. No evidence of expenditure is required if you are just claiming the flat rate allowance.

The allowance is an individual benefit and if you’re both required to work from home then you’re each entitled to an allowance.

According to the Association of British Insurers home insurance cover for office-based employees who have been required to work at home due to COVID-19 regulations won’t be affected.

Unfortunately you will need to wait to claim the allowance on your Tax Return after 6 April 2021. It is an allowance which will reduce your tax liability for that year.

Self Employed people working from home can often claim more than employees because the tax rules for them are slightly different. Claims are usually based on a proportion of heating, lighting, cleaning, insurance and other overheads depending upon the area given over to the business.

It is possible but for periods and years before 23 March 2020 the rules were much stricter and you’ll need to complete an HMRC online form P87, the accompanying notes of which will explain what the rules for eligibility are.

If you want the benefit of the tax allowance to be given through your tax code for 2020/21 you have only until 5 April 2021 to get the claim in. Even then if your employer has already set up his payroll for the last week/month before the tax year end it may be too late. Don’t worry though you will still be able to get a refund direct from HMRC but that will almost certainly take longer.

HMRC have explained that the exceptional approach to homeworking allowances adopted for 2020/21 will not automatically roll forward to 2021/22. Claims for that year will have to follow the normal rules and successful claims will be limited to actual weeks worked from home.

If you’re currently working as an umbrella or limited company contractor and would like to know whether or not you can make a claim which is appropriate for your particular circumstances please don’t hesitate to contact PayStream on 0161 923 0201.

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