Tax Relief for Working from Home: A Comprehensive Guide

Understanding Tax relief for working from home

Remote working has become increasingly common, and with it, the importance of understanding tax relief for home-based employees has risen. If you’re an employee who regularly works from home, you may be eligible to claim tax relief on certain work-related expenses.

Claimable Expenses and Employer Reimbursements

Employers often reimburse their employees for additional household expenses incurred due to working at home. This includes costs like business telephone calls and increased heating and lighting expenses. However, it’s important to note that expenses for items used for both private and business purposes (like broadband) aren’t claimable.

Additionally, you might be able to claim tax relief on personal equipment purchases necessary for your work, such as laptops, ergonomic chairs, or mobile phones.

Fixed Amount Reimbursements and Tax Relief

There is a provision for employers to pay up to £6 per week (£26 per month for those paid monthly) to cover an employee’s additional home working costs. When receiving this fixed amount, employees aren’t required to keep detailed records of their expenses.

Direct Claims to HMRC

In cases where these expenses or allowances are not covered by the employer, employees have the option to claim tax relief directly from HM Revenue and Customs (HMRC). The amount of tax relief you can receive depends on your tax rate. For instance, a basic rate taxpayer can gain £1.20 per week in relief for claiming £6 a week.

It’s possible to claim for amounts higher than the specified rate, but this requires providing evidence of the expenses to HMRC. Interestingly, HMRC accepts backdated claims for up to four years.

Additional Relief for Vehicle Use

Tax relief claims can also extend to the use of personal vehicles for business purposes, such as cars, vans, motorcycles, or bikes. However, this doesn’t apply to ordinary commuting. The rules are more flexible for travel to temporary workplaces or for other business-related travel.

Eligibility Criteria for Tax Relief

It’s crucial to understand that if you’ve opted to work from home voluntarily, or it’s a personal choice rather than a necessity, you are not eligible for this tax relief. Also, those who previously claimed tax relief due to working from home during the COVID-19 pandemic may find that their eligibility for relief has changed.