Please note that tax treatment depends on the specific circumstances of the individual and may be subject to change in the future.
During the lockdown, around 60% of British workers worked from home. Although the restraints of lockdown may have ended, many Brits are still forced to work from home due to illness, social distancing measures or budget cuts. The cost of working from home instead of in the office can quickly add up! However, those who do this could claim working from home tax relief.
The UK government offers a tax rebate to home workers who have racked up extra living costs through working from home. Here’s everything you need to know about what working from home tax relief is and how you can claim it.
What is working from home tax relief?
Working from home can add serious costs to your electricity, water, internet and phone bills. For this reason, UK homeworkers can apply for working from home tax relief that could compensate for the rising costs.
The tax relief is worth up to £125 per year, but the exact amount that you could receive depends on your current tax bracket. Working from home tax relief offers homeworkers relief on up to £6 per week of expenses. If you are in the 20% tax bracket, you could receive a rebate of 20% of the £6, which would give you £1.20 per week.
It is also possible to claim complete compensation for the extra household costs. However, to do this you will need evidence such as bills or receipts. You will not be able to claim your entire bill. Working from home tax relief can simply compensate for any costs that directly relate to your work.
How can I claim working from home tax relief?
If you have not received compensation for at-home work expenses from your employer, you can claim working from home tax relief from HMRC. To do this, simply use the online portal. Alternatively, you can apply for the tax relief as part of your annual tax return.
You do not have to be currently working from home to receive tax relief. Any worker who has been forced to work from home due to the pandemic can claim compensation for the added costs. HMRC is still accepting backdated claims and those who do this will receive a lump sum, instead of monthly payments.
Working from home tax relief is available to any UK employee who has had to work from home at any point. This means that you can make a claim even if you just worked at home for one day a week!
Once your application is approved, HMRC will change your tax code and you will receive the relief directly in your salary until March 2022. You will not be required to show evidence of increased bills unless you are applying for more than £6 per week of tax relief.
Who cannot claim working from home tax relief?
You cannot receive relief if you chose to work from home yourself. As a result, anyone who works from home outside of the pandemic or who has made a personal choice to work from home will not be able to make a claim.
It is also worth noting that employees must apply for tax relief on their own behalf. Consequently, third parties are not able to use the online portal for their employees.
Please note that tax treatment depends on your individual circumstances and may be subject to change in the future. The content in this article is provided for information purposes only. It is not intended to be, nor does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
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About the author
Ruby is a freelance writer who enjoys writing about all things personal finance. After embarking on her own side hustle journey three years ago, Ruby is passionate about helping others to learn about the ins and outs of persona… Read More
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