Tax Relief for Working from Home

Millions of people across the country have been working from home during the Covid-19 pandemic and continue to do so for the foreseeable future. Various reports suggest that employers are open to continue to allow employees to work from home or a hybrid of home and office working on a regular basis once the pandemic is over.

If you are working from home on a regular basis, for either part time or full time, you may be able to claim tax relief for additional household costs.

What Qualifies as Working from Home?

HM Revenue and Customs define ‘homeworking agreements’ as meeting the following 2 tests:

  • there must be arrangements between the employer and the employee
  • the employee must work at home regularly under those arrangements

Usually, these arrangements will be in writing, but this is not a necessity. Arrangements do not need to apply to all employees of the company. The exemption does not apply where an employee works at home informally and not by arrangement with the employer.

What can be Claimed?

You may be able to claim tax relief for:

  • gas and electricity
  • metered water
  • business phone calls, including dial-up internet access

You cannot claim for the whole bill, just the part that relates to your work.

As you can only claim for the additional costs incurred expenses such as mortgage, rent and council tax cannot be claimed.

You may also be able to claim tax relief on equipment you have bought, such as a laptop, chair, or mobile phone.

How Much Can be Claimed?

You can either claim tax relief on:

  • £6 a week from 6 April 2020 (for previous tax years the rate is £4 a week) – you will not need to keep evidence of your extra costs
  • the exact amount of extra costs you have incurred above the weekly amount – you will need evidence such as receipts, bills or contracts

You will get tax relief based on the rate at which you pay tax. For example, if you pay the 20% basic rate of tax and claim tax relief on £6 a week you would get £1.20 per week in tax relief (20% of £6).

Details of how to claim can be found here.