Background
During the pandemic the rules for claiming tax relief when working from home were relaxed. For both the 2020/21 and 2021/22 tax years if an employee has been required to work from home at some point then HMRC allowed for a full year’s entitlement to the tax relief.
From 6 April 2022 this relaxation has ended. It is therefore recommended that taxpayers review their tax code for the 2022/23 tax year to check whether HM Revenue & Customs (HMRC) have included the relief in the notice of coding. If the allowance is included within an individual’s tax code, then unless they are still eligible for the relief in the 2022/23 tax year, they should contact HMRC to request that their coding notice be corrected. Otherwise an individual could find they will have additional tax to pay at the end of the tax year.
Detail
For 2020/21 and 2021/22 where an employee was required by their employer to work from home, even for just one day, the employee was entitled to claim £6 per week home working allowance for the whole year (unless their employer covered their home office costs) without the requirement to provide supporting evidence. This gave employees tax relief of £312 (52 weeks at £6) each year at their marginal rate of tax (20/40/45%).
This temporary relaxation of the rules has now ended. With effect from 6 April 2022 the working from home allowance is only available if an employer specifically requires an employee to work from home, e.g. to stop the spread of Covid, or because they are contractually required to work from home.
An employee will no longer be entitled to claim the working from home allowance where the employer simply allows staff the flexibility to work from home. Therefore, many popular practices of hybrid working arrangements which have increased as a result of the pandemic will not be eligible for the allowance. An employee cannot claim the tax relief simply because they have chosen to work from home.
In order to claim the working from home allowance of £6 per week without the need to provide evidence of costs incurred, as well as an individual being required to work from home, the employer must not already pay their expenses and the employee must have additional household costs as a result of working from home.
In addition one of the following must also apply:
- there are no appropriate facilities available for the employee to perform their job at the employer’s premises;
- the nature of the job requires the employee to live so far from the employer’s premises that it is unreasonable for them to travel to those premises on a daily basis;
- the employee is required, under government restrictions, to work from home.
The £6 per week allowance is claimed based on the actual period worked from home. It is no longer possible to claim a full year’s allowance unless you work from home for the full tax year.
Alternatively rather than £6 per week an employee may choose to claim the exact amount of their additional costs of working from home, for which they would need to keep supporting evidence such as receipts, bills or contracts.
A claim for tax relief would normally be made either through an individual’s personal tax account or through self-assessment if the taxpayer completes a tax return.
If you have any questions regarding the working from home allowance, or would like assistance in determining your eligibility to claim the allowance, please contact our Tax Director, Jenny Marks.
Our Current working arrangement – We remain ‘Open for business’
Our staff have now returned to mainly office based working, whilst continuing to work from home at other times. They can still be contacted in the usual way either via email or by calling the office number where reception will divert your call to the appropriate staff member.
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