July 24, 2020

COVID-19: Claiming Expenses When Working From Home

During the COVID-19 crisis, many employees were asked to work from home. But did you know that employees might be able to claim tax relief for some of the bills they have to pay due to working from home on a regular basis?

Read our blog post to find out what they can claim for, how much, and the implications for payroll.

What Can Employees Claim For?

Employees can only claim for items to do with their work. For instance, any business telephone calls or the extra cost of gas and electricity for their work area.

They can’t claim for things they use for both their private and business use. Examples of these would be paying the mortgage or rent, or their broadband access.

Note they can’t claim tax relief if they choose to work from home.

How Much Can They Claim?

As of 6 April, employers can pay their employees up to £6 a week to cover the additional costs of having to work from home. For previous tax years the rate was £4 a week.

It’s important to note that employers can pay the £6 a week allowance but are not obliged to.

If employers will not pay the allowance, then employees can ask for the amount to be deducted from their taxable pay.

Tax relief on £6 a week homeworking is worth £1.20 a week at 20% tax and £2.40 a week at 40% rate.

HMRC states that claims in line with the employers’ payment won’t require receipts or prove information.

If employees normally do a self-assessment form, they can make the claim using this. But most people will simply need to complete a P87 form. This can be done through an online P87 form through a Government Gateway account or by filling out a postal P87 form.

Home Office Equipment

The government has introduced a temporary new exemption so no income tax or NICs liabilities will be due on reimbursed expenses for the purchase of home office equipment.

The exemption will apply to reimbursements of expenses to employees where you instruct or allow them to purchase their own home office equipment where they are working at home due to the Coronavirus pandemic.

This makes it easier for employees to remain productive while working from home, without incurring a liability to income and NICs.

More Help

Visit the government guidance to check which expenses are taxable if your employees work from home to the COVID-19 pandemic.

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About the author

Christina Holloway

About the author

Christina Holloway

Service Excellence Director

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