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How to claim the working from home tax relief

To help cover the extra costs, HMRC are allowing you to claim tax relief over the 2020-21 and 2021-22 tax years. You can do so using a designated online portal.

 

More than 800,000 people have already claimed in the first three months of this tax year. Around three million people made a claim for the entire 2020-21 tax year.

 

If you worked from home during the last tax year but failed to apply then, you can still do so now. Claims can be backdated, meaning that you may be eligible for up to £250 tax relief.

 

Am I eligible for tax relief?

Not everyone is eligible to claim so you need to check first that you:

 

  1. Were told to work from home by your employer. You cannot claim tax relief if you chose to work from home
  2. Have had to pay higher costs related to working from home
  3. Must not be receiving expenses directly from your employer to cover the extra costs of working from home
  4. Not pay tax by self-assessment as you would need to apply for the tax relief in your tax return rather than through HMRC’s online portal

 

If you are still unsure whether you are eligible, there is a government tool that can help you find out.

 

NOTE: If you are self-employed, you can’t claim because you work for yourself. However, you can claim expenses on your tax return.

 

Do I need to work full time from home?

 

You don’t need to be working full-time from home to receive the tax relief.

In fact, even if you only work at home for just a day, you can still claim relief for the whole of the tax year.

 

But you must be required to work from home by your employer, rather than choosing to.

 

How much tax relief will I get?

 

There are two options to getting the tax relief:

 

  1. Your employer: can cover your expenses and pay them into your wages tax-free
  2. You claim: given the difficult time that many businesses have faced, you are more likely to claim tax relief instead from HMRC

 

NOTE: You can’t do both. You will be unable to claim tax relief if your employer is paying your expenses.

 

If you do claim yourself, how much you will get depends on the rate of income tax you pay:

 

  1. Basic-rate taxpayers get £1.20 a week (tax relief of 20% on £6) = £62 per year
  2. Higher-rate taxpayers receive £2.40 a week (tax relief of 40% on £6) = £125 per year

 

If you didn’t claim last tax year but worked from home, you can backdate your claim. This means you would get a full year’s payment as a lump sum in your next salary. HMRC will accept backdated claims for up to four years.

 

Working-from-home tax relief is an individual benefit, so a couple or a group of flatmates can all claim it if you are all working from home.

 

How do I claim the tax relief?

 

To claim for the working from home tax relief:

  1. You need your Government Gateway ID (if you don’t have one, you can create one during the process)
  2. State the date you started working from home once logged in
  3. Your PAYE tax code will change automatically (this tells your employer how much tax to take off your payslip)
  4. You will pay slightly less tax each month this year on your earnings
  5. Claims for the last tax year are paid as a lump sum in your salary

 

NOTE: If you do self-assessment, you won’t be able to use HMRC’s online portal; instead apply for the tax relief in your tax return. 

 

 

How is the tax relief paid? tax relief paid?

 

Once your application has been approved, your tax code will be adjusted for the tax year. Your employer will then know how much to take from your pay.

 

You will then receive the tax rebate directly through your salary. If you are a basic rate taxpayer, you will get about an extra £5 added to your pay each month.

 

If you have a backdated claim, you will receive a lump sum in your next payslip.

 

What if it doesn’t cover my extra needs?

 

If the sum provided does not come close to the extra costs that you have incurred, you can apply for relief on higher sums.

 

There are two options:

  1. If you complete a self-assessment form each year simply add the claim to that
  2. Fill in the P87 form that allows workers to claim back expenses up to a maximum of £2,500

 

HMRC says that additional costs include things such as:

  1. Heating
  2. Metered water bills
  3. Home contents insurance
  4. Business calls
  5. New broadband connection

 

They do not include costs that would stay the same whether you were working at home or in an office, such as rent, council tax, or your chocolate digestive habit.

 

You will need your:

  1. Employer’s name and PAYE reference (which you can find on your payslip or P60)
  2. Your job title
  3. Receipts (to provide evidence of these extra costs)

 

You won’t get back the full cost of the extra expenses, only tax relief on the total.