Saffery Champness advises on tax reliefs and allowances for working from home

Oct 13, 2020

With many employees now working all or at least part of their time from home, the lasting legacy of Coronavirus may be more permanent home working arrangements for many.

As a result of home working, employees are likely to incur additional household expenses, as well as needing equipment to enable them to work from home safely and effectively. In this article we consider the various tax reliefs available to help with these costs.

Your tax position will depend on whether you are employed or self-employed and, if employed, whether you pay for these expenses personally or whether they are paid by your employer. The rules are rather complex and so this article only looks at the position for expenses incurred by an employee or sole trader.

Suzanne Wasson, a personal tax director in Saffery Champness’ Bournemouth office notes:

“These are difficult times for all of us and therefore any tax relief that is available to help with these additional costs will be welcome news to many.  However, the rules are complex and differ depending on whether you are employed or self-employed, and if employed whether you incur the expense personally or whether your employer pays.” 

The rules for the self-employed tend to be more lenient than for employees and so care is needed but generally if an employee is required to work from home they can claim up to £6 per week without needing any supporting documentation.  However, this does not include costs incurred to put them in a position to work from home, so will generally exclude equipment purchased.  Where employees have purchased equipment it is worth checking with their employer if they are willing to reimburse them, as this can now be done tax free up to 5 April 2021. 

For the self-employed, there is also a fixed amount that can be claimed for tax purposes without requiring any supporting documentation but the amount varies depending on the number of hours worked at home.  In addition, in contrast to employees, the self-employed can claim for equipment used in the business as well as fixed premises costs such as, council tax, water rates, insurance etc.

Suzanne adds:

“The pandemic has dramatically changed the working landscape and highlighted the benefits to both employers and employees of a more agile workforce which could lead to more permanent home working arrangements for many in the longer term.  However, tax relief is much harder for employees to claim and so where relief is unavailable because the stringent tests are not met, it is worth discussing with employers whether they will reimburse any additional homeworking costs incurred.”