It has long been the case that where employees are required to work from home, they are able to claim tax relief to reflect any additional costs they incur as a result. This can broadly be done in one of two ways. HM Revenue & Customs (“HMRC”) will allow a claim of £6 a week from 6 April 2020 (for previous tax years £4 a week) without the employee having to provide evidence of the extra costs or alternatively the exact amount of additional costs can be claimed with supporting evidence such as receipts, bills or contracts. For the purpose of this bulletin we are focussing on the first of these claims.
A claim for tax relief would normally be made either through the personal tax account or through self-assessment if the taxpayer completed tax returns however HMRC have recently made this process easier.
At the beginning of October, HMRC launched a new microservice which allows employees to make a claim specifically for working from home and obtain the tax relief quickly and easily. Once the claim is submitted, an adjustment is made to the employee’s PAYE tax code for the current year and relief is given throughout the remaining months.
The microservice does require a taxpayer to set-up a government gateway ID which takes roughly 10 minutes to do. Once logged in, there are three simple questions to confirm eligibility for the relief before submitting the claim. HMRC do not require any records to be kept for the periods worked at home during 2020/21.
As part of the response to the pandemic, HMRC have now confirmed that for the 2020/21 tax year only, they are relaxing the rules on counting the number of weeks worked at home. If an employee has been required to work from home at some point during the tax year, HMRC will allow a full year’s entitlement to the tax relief. This means that an employee is able to claim tax relief on £312 (52 weeks at £6) at their marginal rate (20/40/45%) if they have been required to work at home for at least one day during the current tax year.
This results in a tax saving of up to £62.40 for basic rate taxpayers.
Agents will not be able to use the new service to apply for the relief on a taxpayer’s behalf. The microservice can be accessed from the HMRC website via the following link – https://www.gov.uk/tax-relief-for-employees/working-at-home.
Our Current working arrangement – We remain ‘Open for business’
Our staff are continuing with office based working on a rota basis, each attending up to two days a week, 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.
If you would like more information or if you require our assistance in making a claim for tax relief, please speak to your usual contact at the firm.
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