How to Claim the Working from home tax relief due to the Pandemic (Covid-19).

If you have been working from home because of the Pandemic you may be eligible to claim the tax relief. This tax relief is only applicable if you have been told to work from home by your employer, and you can claim the tax relief if you have worked from home for just one day.

Self-Employed:

If you are self-employed and choose to work from home you will not be able to use this method of claiming tax relief. Instead, you may be able to claim tax relief for the portion of expenses that are part of the area you designate as your “office” area.

How much can you claim?

You will get tax relief based on the rate at which you pay tax, which means that it varies from person to person.

• If you pay the 20% basic rate of tax and claim the tax relief on £6 a week you will get £1.20 per week. (i.e. 20% of £6), this equals £62.40 for the full year.
• Higher rate payers such as those paying 40% rate will be able to claim £2.40 per week, (40% of £6) which equals £124.80 for the year.

Check if you are eligible?

The important things are:

• You cannot claim if you choose to work from home. You must have been told to work from home by your employer.
• Your employer must NOT be paying for your working from home expenses.
• You have had to pay higher costs due to working from home.
• You do not pay tax through Self-Assessment, this would mean that you claim tax relief through your tax return rather than through the HMRC’s online portal.

 To start with use the “Check if you can claim” questionnaire, on the HMRC portal site

How to Claim the tax relief:

Once you have confirmed that you may claim the tax relief, you need a Government Gateway user ID and password.

You can create a user ID if you do not already have one.

Creating a Government Gateway ID usually takes about 10 minutes. It works best if you have:

• Your National Insurance number
• A recent payslip or P60 or a valid UK passport

Login and provide the information.

• State the date you started working from home.
• Your PAYE tax code will automatically change, to tell your employer how much tax to deduct off your payslip.
• You will now pay slightly less tax every month. If you only apply later in the tax year HMRC will make the adjustment accordingly.
• You will need to apply for previous year’s tax relief separately.

How is the tax relief paid?

HMRC will approve your application and adjust your tax code for the tax year. This will inform your employer how much tax to deduct from your pay. This will mean that you receive the tax rebate directly through your salary.

What if the tax relief doesn’t cover the extra costs?

If you complete a Self-Assessment add the claim for the extra costs through that.

Alternatively:

• Complete a P87 form that allows you to claim back expenses to a maximum of £2,500
  • Enter your job title, PAYE reference and employers name. (find these on your P60 or payslip)
  • You will need to have records and receipts. If your employer pays you any of the costs they must be deducted from the allowable rate.
  • The amount of tax relief you get will not be the same as the amount of expenses you have claimed for. You’ll get tax relief based on the rate at which you pay tax. For example, if you can claim £60 and paid tax at a rate of 20% in that year, you’ll get tax relief of £12.

Additional costs include things like:

• Heating
• Water bills (metered)
• Business calls
• Insurance for home contents
• A new broadband connection

Excluded:

Any cost that would stay the same whether you are working from home or at the office such as rent and council tax.