Tax Relief for Working From Home
Updated: Nov 11, 2020
If you haven't already, you may soon find yourself working from home as a result of the coronavirus outbreak. For many, this offers a complete alternative to the daily commute to the office.
If you're self employed, you're probably used to claiming back costs relating to your premises, equipment and vehicles on your self assessment tax return.
But what about if you're employed? Whether you realise it or not, there are costs that you can claim for the equipment you use, either from your company or the taxman. And it may be easier and more available to you than you think!
If you and your employer both agree to you working from home regularly, you may be paid a tax-free homeworking allowance by your employer. This should be added directly to wages.
This should cover the cost of things such as gas and electricity bills that have increased due to you being at home much more. On April 6th 2020 this is due to increase to £6 a week from £4. This should cover your extra energy spending during home working as a result of self isolation.
Equipment from your Employer
There is no legislation requiring employers to provide staff with equipment to help them work from home. Instead, we recommend speaking to your employer before making the switch to home working. Discuss what you think is required to work effectively from home. This might include equipment such as a laptop or a printer. This would be loaned from the company, something that you will need to return at a later date.
It's also expected that an employer would cover the cost of phone calls. This could be done by providing a mobile phone to you during your home working period. If this isn't offered, you should be able to claim back expenses on these outgoings.
Equipment you've Purchased
Chances are, your employer won't be willing to buy you that comfy office chair. But HMRC might be able to help. After purchasing the item yourself, you can complete a P87 form to claim back some of your money as employment expenses.
This P87 form can be filed if you're an employee not filing a self assessment and have spent your own money on the item which will not be reimbursed by your employer. Expenses are capped at £2500 per tax year.
HMRC guidelines state that anything "necessary" can be claimed on. It's important to remember is that it's down to you to prove that what you have purchased is necessary and not for other personal reasons.
Here are some examples:
Broadband (so long as it's purely work, not fun)
The amount you can get back from this will depend upon your income-rate tax. So, if you're a basic-rate taxpayer, you'll receive 20% back. If you're claiming relief on £1000 of allowable expenses, that's £200 back.
You can file a P87 at any time up to 4 years after the end of the tax year you are making a claim for. So, if you're claiming for this tax year (2019-20), you can claim by April 5th 2024.
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.