Claim tax relief for working from home
Date published: 20 November 2020
Photo: SkyLine - stock.adobe.com
Eligible taxpayers can claim tax relief based on the rate at which they pay tax
Anyone who has been required to work from home due to coronavirus - even for one day - and has increased costs, can claim a year's worth of tax relief from the government.
From 6 April 2020, employers have been able to pay employees up to £6 a week tax-free to cover additional costs if they have had to work from home. Employees who have not received the working from home expenses payment direct from their employer can apply to receive the tax relief from HMRC, if they are required to work from home and have increased costs - such as heating and electricity.
Eligible taxpayers can claim tax relief based on the rate at which they pay tax. For example, if an employed worker pays the 20% basic rate of tax and claims tax relief on £6 a week, they would receive £1.20 a week in tax relief (20% of £6 a week) towards the cost of their household bills.
Higher rate taxpayers would therefore receive £2.40 a week (40% of £6 a week). Over the course of the year, this could mean taxpayers can reduce the tax they pay by £62.40 or £124.80 respectively.
Financial expert Martin Lewis, of MoneySavingExpert, says you don't need to provide receipts or information, unless you believe you have higher costs than £6 a week. He says you can claim more, but you will need evidence of the costs increase and be able to prove the costs are due to you working from home.
Because so many claims have been made, HM Revenue and Customs (HMRC) has created a new online portal which allows workers to claim tax relief for working at home.
Launched on 1 October, the online portal is simple to use and has been set up to process tax relief on additional expenses for employed workers who have been told to work from home by their employer to help stop the spread of coronavirus.
HMRC’s Interim Director General of Customer Services, Karl Khan, said: “We want everyone to get the money that they are entitled to, so we’ve made the online service as easy to use as we can – it takes just a few minutes to make a claim.”
Once the application has been approved, the online portal will adjust an individual’s tax code for the 2020 to 2021 tax year. The employee will receive the tax relief directly through their salary and will continue to receive the adjustment until March 2021.
Employed workers, for example healthcare workers and care home staff, can also claim tax relief on work-related expenses, including cleaning their work uniforms. The extra money can help thousands of critical workers whose efforts are helping save lives during the coronavirus pandemic.
Employees who clean, replace or repair uniform or tools, or pay fees and subscriptions for their work can apply online directly to HMRC and see instantly if they are eligible for tax relief on work expenses.
In 2018 to 2019, more than 500,000 customers (66% of total expense claims) applied for the tax relief using an agent rather than directly from HMRC and will have had to pay fees or commission. But those who are paid through Pay As You Earn (PAYE) can claim directly to HMRC and keep all of the money which they are entitled to.
You can apply directly via www.gov.uk/tax-relief-for-employees/working-at-home
Agents will not be able to use the new service to apply for the relief on a customer’s behalf. This means customers will receive 100% of the tax relief that is due.
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