The Covid-19 pandemic has changed the way we work and for many of us working from home is now the norm. Opinions differ on whether this is a good/bad/indifferent thing, or whether this is temporary/permanent/semi-permanent.
Whatever your views on home working, you may be entitled to some tax relief on the cost of working from home. The rules are slightly different depending on your circumstances, and these are outlined below.
Self Employed
If you work from home and you are Self-Employed, then you may already be recording an expense in your accounts relating to the additional cost of working from home. Check with your accountant.
The expense can be calculated in one of two ways. First, a flat rate based on the hours you work from home. Second, is based on a calculation, which ends up allocating a percentage of the actual running costs of one room your home to the business.
Using either method it’s likely that the number of hours you work from home has now increased, so it is worth revisiting any old calculations that were used to make sure you’re claiming the correct amount and correctly accounting for that extra.
Employed
If you are employed, and have been working from home since lockdown began, there is a small amount that you can claim as tax relief..
Your employer can pay you £6 per week to cover the additional costs you are incurring from having to work at home. Not a huge amount, but potentially not that bad when added to potential savings in commuting costs. Ask your employer about this.
If you don’t want to ask, or your employer can’t to pay you this, then you can instead claim tax relief on the £6 per week via HMRC. Claiming tax relief is not the same as getting £6 per week, but works out as gain of £1.20 per week for a basic rate taxpayer, and £2.40 a week for a higher rate tax payer.
You can claim this on your tax return. If you aren’t required to complete a tax return then you can file a P87 form available here. This can be done online if you have a government gateway set up, but you can also file a paper version of the form. Once it has been submitted, your tax code will be amended to give you the tax relief on your claim- meaning you’ll pay very slightly less tax than you were previously (roughly the amounts mentioned above)
In previous years if you have had to buy other office equipment to use at home during lockdown, and your employer is reimbursing you for this, then you would potentially be taxed on this as a benefit in kind. However, for this tax year (ending April 5th 2021) the rule has been relaxed. If it looks like you may be working from home for the foreseeable future and the kitchen table doesn’t cut it, then you might want to speak to your employer about this.
If you're unsure about anything and would like to discuss then get in contact with us on hello@llamaaccounting.com or call 02921 768888