Working from home tax relief was a special measure introduced during the COVID-19 pandemic for both the 2020/21 and 2021/22 tax years, and therefore worth up to £280, to cover the extra costs from working at home, such as higher heating and broadband bills.
In this update we look at who is eligible, how to claim and how the working from home tax relief will be changing in the next tax year (2022/23).
Who is eligible for working from home tax relief?
Working from home tax relief applies if you:
- Were told to work from home by your employer. You cannot claim tax relief if you chose to work from home
- Have had to pay higher costs related to working from home (but you don’t need to show evidence of this)
- Did not receive expenses directly from your employer to cover the extra costs of working from home.
Furthermore, the relief also applies if you had to work from home because you were told to self-isolate by NHS Test and Trace, or because you were self-isolating having been pinged by the NHS app.
As working from home tax relief is an individual benefit, a couple or a group living at the same premises can all claim it if you are all working from home.
How much can I claim?
To make the process easy, HMRC says that for claims of up to £6 a week, you won’t need to justify that figure – meaning you won’t need to keep receipts or provide information.
Tax relief of £6 a week equates to a gain of:
- £1.20 a week for a basic 20% rate taxpayer (£62.40 a year)
- £2.40 a week for a higher 40% rate taxpayer (£124.80 a year)
- £2.70 a week for a top 45% rate taxpayer (£140.40 a year)
If you believe you had higher costs, you can claim more, but you will need evidence of the cost increases and must be able to apportion these extra costs specifically to the fact you are working from home – a much more laborious process.
If you didn’t claim for the last tax year but worked from home, you can backdate your claim. This means that you would get up to two full years’ payment as a lump sum in your next salary. In fact, you can back-claim up to four years (though it’s more difficult to claim back before 2020, as the criteria were much stricter, and you could only claim for individual days).
How to claim relief for 2020/21 and 2021/22?
In October 2020, the Government created the working-from-home microservice to help people claim tax relief in the pandemic. Within this the rules changed, so that if you have to work from home, even for a day, you automatically get given the relief for all of the tax year at the £6/week relief rate.
You can still use the microservice now to process claims for the 2020/21 tax year, as well as for 2021/22. Though this doesn’t apply if you file self assessment returns, you will be able to claim for the entire years automatically as part of your return, in the same way as those using the microservice.
How will this change for the 2022/23 tax year?
Working-from-home relief rules return to their normal format for the 2022/23 tax year which is much stricter.
HMRC says you can’t claim tax relief if the only reason you’re required to work from home is coronavirus, even if it’s because you’ve tested positive.
Nor are you eligible if you choose to work from home for part of the week because your employer offers ‘hybrid working’ – even if this is written into your employment contract.
This means you are only eligible if:
- You can’t perform your job on your employer’s premises because they don’t have the facilities; for example, your employer has a small office with no space for you to work there
- Your job requires you to live so far from your employer’s premises that it would be unreasonable for you to travel there every day; for example, the workplace is in Birmingham but your job requires you to work in Scotland
- Or government restrictions mean you must work from home (however these restrictions have now been removed so can no longer be applied for the 2022/23 tax year onwards)
If this applies to you – which it won’t for most – you can claim using the Gov.uk microservice for the whole year.
We can help
For those claiming working from home expenses via their self assessment, this is an area that our tax team can advise on and assist with as part of our self assessment service.
Please contact us to discuss our service or for a quotation.
Bob has more than 20 years experience in tax covering corporation tax and personal tax compliance and advisory.