A guide on tax relief for employees working from home

A woman working from home

Within the last 18 months or so, since the Covid-19 pandemic lockdown restrictions came into place, more people have been working from home than ever before. 

If you’ve moved your working life from the office to your home, you’ll be pleased to know that you might be eligible to claim for working from home expenses. While the amount of money that you can claim varies depending on individual circumstances, it’s still worth checking to see if you’re able to claim for working from home tax relief.

If you’re still not sure whether you’re eligible to claim, or you want to know how it works and how much money you might be able to claim back, check out our guide below.

Can I claim tax relief if I work from home?

In order to be eligible to claim tax relief for working from home, you’ll need to meet one or more of the following criteria:

  • You’re only claiming for working from home expenses, all other expenses must be claimed separately.
  • You must not have had any expenses already paid by your employer.
  • You must not pay tax by self-assessment.
  • You must have incurred higher costs due to working from home.
  • You must have started working from home during the pandemic.

How does working from home tax relief work?

Working from home tax relief is paid at a flat rate and it can be claimed even if you only work from home part-time.

After the government opened a microsite last year during the pandemic, it’s now even easier to check whether you’re eligible for working from home tax relief and if you are, you can make a claim quickly online.

What is the working from home allowance 2020/21?

You can claim tax relief of £6 from April 2020 if you do not keep evidence of the costs incurred or you can claim the exact amount of extra costs that you’ve incurred above the weekly amount, providing that you’ve kept evidence such as contracts, bills and receipts.

You can also get working from home tax relief backdated, so if you didn’t claim last year, it’s possible for you to get tax relief from last year and the current year. 

What types of things can I claim tax back on?

There are several things that you can claim as allowable expenses, including:

  • Financial costs such as insurance or bank charges.
  • Office costs and equipment such as stationery and phone bills.
  • Travel expenses such as bus fare, parking and fuel.
  • Training courses and their associated costs.
  • Staff costs such as sub-contractors or salaries for staff.

How to claim tax back when you are working from home

In order to make a claim, you can check your working from home tax relief eligibility on the GOV.UK website where you can go through the necessary steps and criteria to make a claim.

It’s relatively quick and easy to do to check whether you’re eligible and the actual process of making a claim involves filling in a few details about you, your business (if you’re self-employed) and the things you want to claim for.

How much money can I claim back?

The amount of money that you can claim back depends on whether you’ve paid tax for that year, what you’ve spent and the rate at which you’ve paid tax.

For example, all taxpayers can get a flat rate of tax relief of £6 a week, and basic-rate taxpayers can gain £1.20 a week back which equates to 20% of £6, which works out at £60 a year.

Taxpayers who pay a higher rate can benefit from £2.40 a week, which is 40% of £6 and equates to £125 a year.

So, depending on the rate of tax that you pay, if you need to claim for the past two years, you could either receive £120 for basic-rate taxpayers or £250 for higher-rate taxpayers.

While it doesn’t seem like an awful lot of money to claim back, it’s much better than nothing and the amount you receive will depend on your own individual circumstances.

Who is eligible to receive a working from home tax rebate?

Whether you’re able to make a claim on tax relief depends on whether you’re employed or self-employed. 

If you’re self-employed

In this case, you can claim for more costs when working from home as opposed to employed workers, such as a proportion of costs of things like gas, electricity, water, heating, insurance, lighting, mortgage interest and more.

In order to work out the proportion that you can claim on, you will need to consider the amount of time that you use your home for work, as well as the size of the area that you use in some cases.

You can also only claim expenses via the government self-assessment tax return which you’re required to submit every year to declare your earnings.

If you’re employed

If you’re employed but work from home, you can only claim tax relief on expenses that you use solely for work purposes, such as additional energy costs that power your work area or the cost of business calls that have been added to your home phone bill.

You can’t make a claim for things that you use for both business and private purposes, so you can’t claim tax relief for rent or internet, for example.

How long will it take to get my working from home tax rebate?

The length of time that it takes to receive a working from home tax rebate depends on factors such as when you apply and how busy the website is with requests for backdated tax relief.

Since April 2021, more than half a million people have already claimed tax relief in the UK and are already benefitting from the rebate, so if you think you could be eligible for working from home tax relief, head to the government website as soon as possible to check and then submit your request to claim back tax.

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