Working from home (employees)

Working from home has become more common over the last few years, particularly following the pandemic, as more and more are working flexibly and remotely. What started as a temporary home working arranging may have turned into a permanent one.

Many employees are still missing out on valuable tax relief when it comes to home working.  Employees may reclaim their actual costs from their employer, from HMRC, or they may claim fixed rate allowances to cover their costs.

It’s first important to understand which employees are eligible for tax relief. If you are voluntarily working from home and your employer is not reimbursing you the cost of such because it is not necessarily incurred, its unlikely that any tax relief will be available. The employer may be able to reimburse £6 per week or actual qualifying costs free of tax. If they don’t, no claim is possible.

On the other hand, if home working is required by the employer tax relief will be available if not reimbursed by your employer. Home working must be ‘wholly, exclusively and necessarily’ undertaken for the proper performance of their employment duties. This can be a high bar to meet. When an employee is required to work from home, the employer must be able to demonstrate that home working is required by the employee and that it is not undertaken on a purely voluntary basis.

Employees can meet these essential rules if they are required to work from home as a contractual condition of their employment which is usually the case when they live for away from their employer, their employer is online only and has no office or they are simply required to work from home due to the nature of the job.

Additionally, if an employee is physically unable to attend a workplace due to disability or, a health matter, i.e. recovering from an operation, long-term illness, such as long COVID etc, or if the employer has temporary closure of its premise e.g due to Covid-19 etc. HMRC will not challenge that there is a necessary requirement to work from home.

COVID-19 is an exception to the rules and HMRC has relaxed the rules for 2020-21, 2021-22 and the 2023-23 tax years. This means that employees who work from home to avoid exposure to the Coronavirus or due to workplace changes caused by Coronavirus will qualify for tax relief on their homeworking costs.

Tax relief can be claimed through your self assessment tax return or via HMRC directly if you are not in self assessment. The tax relief will be available by claiming a flat rate allowance actual qualifying costs.

Please contact us to find out more.