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Working From Home

Working from Home due to Coronavirus (COVID-19)

If your employer requires you to work at home, you can – and have always been able to – claim for increased costs due to working from home, e.g., heating and electricity.

Clearly, right now many firms have closed workplaces and that means across the UK millions of staff are temporarily required to work from home, and therefore are eligible to claim for increased costs. HMRC says it will consider claims from employees working at home due to coronavirus measures if their usual workplace is closed.

Yet apportioning these costs can be is difficult. So instead you can use a simple rate and claim £6 per week. You can claim more if your costs are higher, but it is a more labour intensive process.

There are two ways to do this:

Employers can pay you £6 per week extra tax-free. Employers can give you an allowance up to this amount and what they give you is free from tax, so you receive it all (to give you more, it will need to make special arrangements).

But right now with many firms struggling, asking may be bad timing, so instead you can claim tax relief on £6/week (worth £1.20/week at 20% tax, £2.40/week at higher rate).If your employer won't pay expenses for your extra costs due to necessary working from home, but you have them, you can then ask for the amount to be deducted from your taxable income.

To make the process easy, HMRC says that claims in line with the employers' payment (i.e., for £6/week) will not need to justify that figure – meaning you won't need to keep receipts or prove information.

The impact of a £6/week claim is the tax savings, that's a gain of £1.20/week (about £62/year) for basic 20% rate taxpayers, and £2.40/week (about £124/year) for higher 40% rate taxpayers.

If you believe you have higher increased costs then you can claim more, but you will need evidence of the cost increases.

How to claim the tax relief

If you normally do a self-assessment tax return, you can claim on that. Yet for most people, this will simply require filling in a P87 form.

If you claim by sending this the form by post, you'll need to add a 'Using your home as an office' expense manually in the 'Other expenses' section.

You can claim retrospectively on expenses incurred. So, if you're only at home due to coronavirus, it's best to wait until you're back at work (or a few months anyway) then make the whole claim at once. Your tax code will likely be adjusted so you pay less tax over the year, as opposed to you getting a direct tax refund.

If you had to buy home office equipment to work from home and your employer is paying you back – normally this would be a ‘benefit-in-kind’, which means you’d need to pay tax and national insurance on it. But specifically for those working from home because of coronavirus, for this tax year ending 5 April 2021 your employer can pay you in full, with no tax.

HMRC guidance