Many employees who worked at home during the COVID-19 pandemic found they preferred that arrangement to commuting every day.
Employers can continue to pay their employees a tax-free allowance of £6 per week (£26 per month) if there is a homeworking arrangement in place with those employees. The employer may also reimburse larger amounts to employees who can show they incur variable costs (such as heating) in excess of £6 per week by working at home.
Employees who do not receive a homeworking allowance from their employer, despite being required to work at home, can claim a tax deduction of £6 per week from HMRC. However, a homeworking agreement must be in place, rather that it being an optional arrangement.
Where an employee can show that the extra costs of working at home are higher than £6 per week, they can claim a deduction from HMRC for the actual additional costs. With electricity and gas bills climbing upwards, the costs of heating a room to work in may well be more than £6 per week. HMRC may ask to see proof of those costs, so keep the evidence in the form of bills.
The claim for the home working deduction can be made on the employee’s self-assessment tax return, if they normally complete one, or by using the online P87 form. Where a similar claim has been made in an earlier year, the taxpayer can renew that claim by phoning HMRC.
We can help you calculate the additional costs of working at home and how much you are able to deduct for tax purposes.
