What You Need to Know About your Work from Home Tax Allowance

“After over five months of lockdown and working from home routines, people in the UK are finally starting to return to some kind of ‘normality’. With the Zoom quizzes and Teams conversations slowly coming to a halt, some are beginning to venture back into the office for meetings and full working days. But what if your employer requires you to work at home? What some may not know is that you can claim for increased costs when working from home. For example, this can cover heating, electricity and WiFi costs. Even if you are only temporarily working from home, the HMRC will consider claims from those working at home due to coronavirus rules.

However, apportioning these costs is hard, so instead, you can claim a rate of £6 a week. You can claim more if your costs are higher, much it can turn into an intensive process. There are two different ways that you can do this:

Employers pay you an extra £6/week tax-free – Employers can give you this allowance tax-free, so you get it all for your working from home costs. If you feel that you need more, you will need to make separate arrangements. However with many businesses economically struggling, asking for this may be bad timing.

Claim tax relief on £6 a week (worth £1.20 per week at 20& tax, £2.40 per week at a higher rate) – If your employer can’t pay for your extra costs whilst you are working from home, you can ask that the amount be deducted from your taxable income. HMRC says that claims in line with the employer’s payment will not need to justify that figure.

Claiming the tax relief
If you usually fill out a self-assessment form, you can claim on it. However for many, this will require completing a P87 form. This can be done online or by post. When filling out the form, you will be asked to provide your employers name, a PAYE reference and your job title. If you are doing the form by post, you will also need to provide your national insurance number. The key section is entitled ‘Using your home as an office’ (below).

As you can see on the online form, there are two boxes to complete, ‘Amount paid by you’ and ‘Amount repaid to you by your employer. Here is what they both mean:

Amount paid by you – Provided you’ve had increased costs since working from home, simply put a total amount that is equivalent to £6 per week for the period that you have been remote working. You will not have to provide receipts.

Amount paid to you by your employer – If you have not been provided with a home working from home allowance allowance from your employer, put £0.

It is possible to claim on expenses that you have had during the pandemic whilst working from home. Therefore it is best to wait until you return to work, and then make the entire claim at once. Once your claim has been submitted, you will hopefully hear back in a matter of weeks. However with the current climate, it may take a little longer.”