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We provide guidance on claiming tax relief for working from home.

More than half a million employees in the UK have already claimed tax relief for working from home due to Coronavirus. Through HM Revenue and Customs (HMRC) tax relief claims, you may be able to claim tax relief for extra household costs if you have had to work from home on a regular basis or for all/part of the week.

There are certain conditions set by HMRC before employees can make a claim with HMRC. They are as follows:

• Employee must have paid tax during the tax year
• Employer must not have reimbursed employees for additional cost incurred

Employees may be able to claim tax relief for the following expenses:

• Cost personally incurred by the employee while working from home
  • Household costs such as gas, electricity, and water
  • Business phone calls, including dial-up internet access

Employees will not be able claim for the entire bill, just part of the bill that relates to working from home.

How Much Can Employees Make a Claim For?

Employees can claim tax relief on either:

1. £6 a week from 6 April 2020 – Employees will not need to keep evidence of extra costs
2. Exact amount of extra costs incurred above the weekly amount. Employees need to provide evidence such as receipts, bills or contracts

Employees will obtain tax relief based upon the rate of tax paid. For example, employees who pay who have made a claim for working from home at £6 a week:

• £1.20 a week for a basic 20% rate taxpayer (£62.40 a year)
• £2.40 a week for a higher 40% rate taxpayer (£124.80 a year)
• £2.70 a week for a top 45% rate taxpayer (£140.40 a year)

Employees who have worked from home for 1 week during the tax year 2020/21 due to Covid-19, can claim the working from home allowances for the full tax year i.e. £6 per week equates to £312 for the full tax year. Therefore qualifying employees who are a 20% taxpayers, will save £62.40 in tax for the year.

It is worth noting there are certain exclusions to claiming the tax relief. Tax relief is not available if the employee chooses to work from home.

To claim for tax relief for working from home, you can apply directly via www.gov.uk for free.

Once the employee’s application has been approved, HMRC will adjust your tax code for the 2021 to 2022 tax year and additional tax relief obtained directly through your salary.

If you have any queries regarding claiming tax relief for working from home, CavanaghKelly’s dedicated team of tax experts can advise, assist and support you in your tax relief claims.