Working From Home Tax Relief

EMPLOYERS… with many of your staff working from home due to Covid 19, it is important you make your employees aware of a tax relief they can claim. Even if they had been working from home for just one day, they can claim tax relief for the WHOLE YEAR.

The tax relief obtained is £62 per annum for basic rate tax payers and £124 for higher rate tax payers (This is based on HMRC’s use of home as office allowance which is £312 for the current tax year). Once the application has been approved, the online portal will adjust an individual’s tax code for the 2020 to 2021 tax year. The employee will receive the tax relief directly through their salary and will continue to receive the adjustment until March 2021.

Please note the tax relief is due for those employees who have not been reimbursed by their employer for the additional costs they have incurred as a result of working from home. The employees who have received a reimbursement by their employer will need to consider whether they have incurred additional costs relating to them working from home which haven’t been reimbursed and whether tax relief could be obtained on those costs.

HMRC has emphasised that it is not possible for employees to simply decide to work from home in light of the Government’s advice. There must be a discussion with the employer and, if the employer decides that the employee should work from home, the deduction will be available.

HMRC says: “We recognise that the working-from-home situation is very fluid this year, so we’re accepting claims for the full year’s expenses. That includes even if people have only worked from home for some of the year, to avoid needing to contact us if you have to work from home again.”

You only need to claim once, and you will automatically get it claimed for ALL of this tax year at the £6/week relief rate. So if you have had to work at home at any point since 6 April 2020 and you have higher costs due to it, claim immediately.

(If you were required to work from home before lockdown, you can still put in a claim for relief for that period (assuming you had increased expenses). Unlike this tax year, you should only claim tax relief for the weeks you were working at home, not the whole year.)

To process these claims, HMRC have set up a new dedicated working-from-home microservice that will automatically apply the whole 2020/21 tax year’s relief via your tax code, making claiming the whole amount very easy. Anyone making a claim for this tax year, who hasn’t already put in a claim, can use it.

HMRC will alter your tax code which will result in less tax taken off each month for the rest of the year which means you’ll take home more.

If you have already made a claim this year, you will not miss out. Although you won’t be able to use the new microservice, you can still claim the allowance for the rest of the year (even if you haven’t worked from home since you first claimed it). Just fill in another P87 form clearly stating the amount for the year as the maximum £312 (£6 x 52 weeks) – don’t worry, this isn’t double-submitting.

Those who are employed but do their tax via self-assessment each year can’t use the microservice. Instead, you can claim the allowance as part of the self-assessment form (it’s included in section 20 on the full return and section 2.5 on the short form). HMRC have confirmed that for this 2020/21 tax year, you will be able to claim for the entire year automatically when filling in the form, in the same way as those using the microservice.

If you would like to discuss any of this, please call the office on 02392 269977.

Link below to microservice:

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JWR are a three director, progressive, modern and friendly firm of Chartered Accountants and Chartered Tax Advisors based in south east Hampshire. Trading since 1992, we have built a reputation for client care and ‘out of the box’ solutions.

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