Important Updates to Working from Home Tax Relief
Updated: Jan 13
In the second lockdown here in England, we've seen the return of many workers to their spare rooms or makeshift home offices. With that, there will be plenty more opportunities to take advantage of work-from-home tax relief.
With a dramatic increase in working-from-home tax relief over the past few months, HMRC has revamped the system and opened a new portal. This means that even if you work home for a single day, you could claim for the whole year. Yes, you read that correctly!
In this blog, we're going to run through everything you need to know about the new system - and how to claim for a full year if you've already submitted a P87.
On 1st October, HMRC launched an online portal which is designed to simplify the previous process of claiming tax relief on additional expenses for employed workers who have been forced to work from home by their employer during the coronavirus pandemic.
As of 6th April 2020, employers have been able to pay employees up to £6 a week tax-free to cover additional costs from working from home. If employees didn't receive the expenses payment directly from their employer, they can apply to receive the tax relief directly from HMRC. If you are eligible, this tax relief is based on the rate in which you pay tax.
HMRC is now encouraging individuals claiming tax relief directly via the new portal.
The service update means you can automatically get the whole tex year's claim, even if you've spent only one day working from home since 6th April. This creates flexibility in this tax year as people may return to working from home after having a short period working from home earlier in the year. In this case, they wouldn't need to contact HMRC again.
Once the application has been approved, the system will adjust an employees tax code for the 2020-21 tax year. This individual will then receive tax directly through their salary.
If you've already claimed for this tax year using a P87 form, you'll need to follow these steps to ensure you won't miss out.
Whilst you won't be able to claim using the online portal, you can still claim the allowance for the rest of the year by filing another P87 form. This time, clearly state the amount for the full tax year i.e. £312 (£6 x 52 weeks).
HMRC is also issuing a reminder that employed workers such as healthcare workers or care home staff can claim tax relief on other work related expenses such as the uniform tax rebate. This is for an employee cleaning their work uniform at home.
For further guidance specific to your own circumstances, we recommend meeting with an accountant. For more information and advice, get in touch with Catherine today. Give her a call on 01423 431889 or email firstname.lastname@example.org.