Tax relief if you are working from home

Did you know that if you are employed in the UK and needing to work from home, you are entitled to tax relief? Tax relief is paid by the HMRC rather than your employer. Here is a short guide on how to claim it. 

I am not a financial advisor, so take this information as you would a chat with a friend in a coffee shop – it’s an informed tip and not a financial advice, ok?
For everything you might need to know more about that I am not covering in this article, go to this page. Now let’s get into key details.

Flat rate claims

The flat rate tax relief for anyone working from home and is a flat rate allowance of £26/month (or £6/week) from 6 April 2020. Important details:

  • You are not eligible for the tax relief for the time you have been furloughed
  • It is not required to provide evidence of your costs increasing because you work from home under this option i.e. if your utilities went up, you are not required to provide the details of the increase
  • You can claim relief for the entiretyof2020/21 even if you only worked at home for a day or two. For other, non-pandemic years, the allowance is available for any full weeks you have worked from home

Tax relief is deducted directly from your taxable income and is usually handled through PAYE. You will receive a cheque only in instances where you claim retrospectively for past years – there is a limit to how far back you can go. If you are claiming for 2020/20201, the relief could look like this example:

you earn £1,000 per month, and make a successful claim for £26 per month.

Your taxable income is reduced by the successful claim amount and therefore is reduced to £974 (£1,000 less £26) – if you are in the 20% tax bracket, you end up paying £5.20 less in tax per month. This changes for higher tax bracket accordingly.

Actual expenses claims

If you wish to claim more than £26/month, you can claim tax relief for specific things, including an increase in costs such as additional heating and lighting of the room you work in, specific work-only purchases to make your home office usable, or metered water – note rent, council tax, water rates, broadband costs or insurance are not costs you can claim for. You will need to provide evidence such as bills to support this claim and the costs must Be incurred whollyexclusively and necessarily for your work.

How to claim

Once you’ve decided the best option for you, here’s how to claim. 
You can make the claim online, by phone, by post or through your tax return. If you usually complete a self-assessment return, you can claim it as part of this process. For the 2019-20 tax year, the return is required to be filed by 31 January 2021, and by 31 January 2022 for the 2020-21 tax year.

If you don’t usually complete self-assessments, you can still claim it by filling in a P87 form either online using the Government Gateway or using a postal form.

You will require the following information to complete your claim:

  • Your passport details
  • National insurance number
  • Name of your employer and PAYE reference (found on your P60)

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