Claiming Tax Back While Working from Home Due to Coronavirus

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By Cai Bradley
Updated on Thursday 23 April 2020

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As life in lockdown continues, millions of employees are being asked to work from home and use their house as a temporary office in order to comply with new social distancing measures amid Coronavirus (COVID-19).

While it may seem convenient at first, working from home can lead to a potential increase in your household bills, such as electricity and heating.

To combat this, you are able to apply for tax deductions (or tax reliefs) while working from home. There are a few options available in terms of how you claim and how much you receive, so don’t jump the gun just yet.

Claim tax back when working from home

If you haven’t been furloughed and are required to work from home (i.e. you haven’t voluntarily offered to), you can claim for any additional expenses or costs that arise as a result of doing so.

Millions more employees are now being required to work from home temporarily due to Coronavirus, and the good news is that these people are also eligible to claim.

The HMRC has stated that it will consider claims from employees who are working from home due to Coronavirus as long as their workplace is closed.

Read more: 10 Things You Need to Know About the Furlough Scheme

Working from home: tax allowance

Employees have always been able to claim tax relief for working at home, but new rules brought in from April the 6th 2020 make the process a lot easier and the allowance slightly larger.

As you can imagine, determining exactly how much you have spent on bills relating to your work alone can be a difficult task, which is why HMRC are now allowing all those who work from home the chance to claim a rate of £6 per week.

You can opt to claim for more if your expenses are considerably higher than this, but bear in mind that you would need to provide proof and it can end up being a long and tedious process.

There are two ways to claim, either by asking your employer for a “working from home allowance” of £6 per week tax-free, or claiming a tax relief through the HMRC.

Employers paying an additional £6 per week tax-free. You are entitled to ask your employer for an allowance of £6 per week, but as things stand, it may not be the best time to ask your boss to spend more on wages.

Claiming a working from home tax relief on £6 per week. An alternative option is claiming tax relief on £6 per week of your salary, which equates to around £1.20 a week for basic rate taxpayers (20%) and £2.40 for higher rate taxpayers (40%). This only applies to those whose employers are not paying their expenses to cover the additional costs of working from home.

HMRC has made the latter option as simple a process as possible, as those who make a tax relief claim on £6 per week are not required to provide any proof.

While £1.20 a week seems insignificant and hardly worth the effort at first, it’s an annual gain of around £62 for 20% taxpayers, which could provide a well-needed bonus in these difficult times.

Read more: Coronavirus – Financial Advice for Employees in the UK

What expenses can I claim when working from home?

You can’t claim for all of your household bills while working from home, only costs related to your work or using your home as an office.

This includes costs related to business telephone calls, as well as additional gas and electricity for your workspace.

Some things may be used for both private and work use, such as rent or Wi-Fi, so you cannot claim for these.

You might like: The Best Way to Get Cheaper Energy Bills

Working from home can bring with it some tax benefits, so make full use of it if you are eligible.

How to claim the HMRC working from home tax relief

You can claim a working from home tax relief using a self-assessment form if that’s what you usually use to pay your taxes, but those who don’t are required to complete a P87 form.

You can get a P87 form online or via post, and you will need your:

  • Employer’s name and PAYE reference
  • Job title
  • National Insurance number (for postal P87s)

The key section in the HMRC form is under ‘Using your home as an office’; you can leave most of the other categories blank if you don’t want to claim for anything else.

You will need to tick ‘Yes’ to the question ‘Do you want to claim tax relief on expenses from using your home as an office?’, and then fill in both the ‘Amount paid by you’ and ‘Amount repaid to you by your employer’ boxes.

In the ‘Amount paid by you’ box, the HMRC has recommended that you enter an amount that is the equivalent to £6 per week for the time that you’ve been working from home, which means that you won’t need to provide receipts or evidence.

In the ‘Amount paid to you by your employer’ box, you simply enter £0 if your employer hasn’t paid you a working from home allowance.

Note that the postal form does not include this section and you will need to add it manually under ‘Other expenses’.

When should you claim? If you’re working from home due to Coronavirus, your best option is to wait until you’re back at work as normal to make the claim, as they are made retrospectively.

It’s possible that your tax code will change so that you pay less tax over the course of the year, so you may not receive a direct refund as such. Online applicants usually hear back within two or three weeks, but there’s no guarantee at the moment as the HMRC is under pressure to deal with a range of COVID-19 issues.

Read more: Financial Help for the Self Employed During Coronavirus

Working from home tax allowance

Claiming a working from home tax relief can be worth doing, particularly if you have noticed a rise in your bills during the lockdown.

It may not seem like much at first, but the overall gain is certainly worth the effort, considering you don’t need to provide any sort of evidence if you’re an eligible applicant.

For more information on Coronavirus and personal finance, be sure to browse our website and read our related guides:

Coronavirus: Financial Help for Employees in the UK

Coronavirus: Advice for the Self-Employed

Beware of Coronavirus Scams

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