Working from home due to coronavirus, even for a day? Claim a £62 tax relief payment (based on a 20% basic taxpayer)
What is the HMRC Working From Home Tax Relief and who is entitled to it?
If you are a UK tax-paying employee and were told to work at home by your employer because of COVID-19 and, as a result, your household costs have increased, you are eligible to claim the working from home tax relief.
HMRC received more than 3 million claims for this tax relief for the 2020 to 2021 tax year.
Myrtle Lloyd, HMRC’s Director General for Customer Services, said:
“Half a million people have already reduced their Income Tax this year by up to £125, by claiming tax relief on their working from home expenses. We want everyone eligible to benefit.”
How much Tax Relief can you claim as a result of this rebate scheme?
From 6 April 2020, the amount employers have been able to pay tax-free without employees having to provide evidence of an increased bill is up to £6 a week. Employees who have not received the working from home expenses payment direct from their employer can apply to receive the tax relief from HMRC.
Eligible customers can claim tax relief based on the rate at which they pay tax. For example, if an employed worker pays the 20% basic rate of tax and claims tax relief on £6 a week, they will receive £1.20 a week in tax relief (20% of £6 a week) towards the cost of their household bills.
Higher rate taxpayers would receive £2.40 a week (40% of £6 a week). Over the course of the year, this could mean customers can reduce the tax they pay by £62.40 or £124.80 respectively.
If employees were required to work from home last year but did not claim for the tax relief, they have not missed out; HMRC will accept backdated claims for up to 4 years. They will receive a lump sum payment for any successful backdated claims.
If a couple both work from home, can they both claim the Work From Home Tax Rebate?
The HMRC working-from-home tax relief is an individual benefit. So if you’ve had an increase in costs because you’re required to work from home, you can both claim it.
If you are a couple or a group of flatmates living in the same property, and you’re all required to work from home, and it’s fair to say that household costs have increased specifically from each individual working from home, you can all claim it.
Does the Work from Home HMRC Rebate apply to part-time employees who don’t pay tax but may be working from home?
As this is a tax rebate, you need to pay tax in the tax year you are claiming for, to be able to claim it back.
The current threshold for the 2021-22 tax year is £12,570, which means you need to earn above £12,570 in an individual tax year before tax is deducted from your salary.
What are important dates for claiming The Work From Home Tax Rebate?
During the 2020 lockdown, HM Revenue & Customs (HMRC) launched a ‘microservice‘ which, even if you only needed to work from home for a day, allowed you to get a WHOLE year’s tax relief.
That now applies for the new 2021/22 tax year too – meaning many people are due TWO years’ relief, worth up to £280.
As HMRC allows taxpayers up to 4 years to claim back any tax they are owed, you have until April 2025 to claim the work from home tax rebate. As Tax Advisors, we recommend claiming this rebate as soon as possible.
If you’ve already claimed for 2020/21, you MUST CLAIM AGAIN for the 2021/22 tax year, via the same microservice (you won’t be shown the box for last year, just this year).
Relief for the current tax year will be paid via a change in your tax code. This is what tells your employer how much tax to take. The result will be less tax taken off each month for the rest of the year.
Only required to work from home part-time? You can still claim
Many offices and places of work have been reopening (and closing, and reopening…), but to ensure they are Covid safe, fewer employees can go into the premises at any one time. Often this is done by allowing different employees to come in on different days and stay at home on the rest.
HMRC has confirmed that as long as you are required to work from home and have additional expenses due to it, even if…
- It is only working from home part-time
- Others are going into work
- You are only needed to work from home, say, one day in five, and were in the office the rest of the week
For all of the above situations, you can claim the full year’s allowance.
For claims before 23 March 2020, you don't automatically get the whole tax year
If you were required to work from home before lockdown – the case for many at the start of the pandemic – you can still put in a claim for relief for that period (assuming of course you had increased expenses).
But here, unlike this tax year, you should only claim tax relief for the weeks you were working from home, not the whole year.
The criteria applied when accepting these claims are likely to be far more strict.
To do this, complete the online P87 form or postal P87 form
If you’ve been working from home for longer, you can claim back up to four years, ie, to April 2017 – the current tax year. You will have to do a separate form for each tax year.
How do I claim The Work From Home Tax Rebate if I am Self Employed?
Self-employed workers can claim for more costs when working from home, such as a proportion of the costs when lighting, heating, cleaning, insurance, mortgage interest, water rates, and general maintenance are used for work.
To work out the proportion, you’ll need to account for the amount of time you’re using your home for work, and in some cases the size of the area within the home that’s used for work purposes. For example, if you work in a study you’d only be able to claim for the costs of heating that room while you work.
If you work from home for more than 25 hours a week, you might be able to use HMRC’s simplified expenses system.
You can only claim expenses via a self-assessment tax return, which you have to submit to declare your earnings each year anyway.
Expenses incurred from working from home can be deducted from your profits, which will reduce your overall tax bill.
How can you claim Tax Relief for Working From Home?
- Not pay tax by self-assessment (as you’ll have to claim via your next tax return)
- Not have already had your expenses paid by your employer
- Have started working from home due to the coronavirus pandemic
- Have encountered higher costs due to working from home.
You’ll need a Government Gateway user ID and password to proceed, but if you don’t already have one, you’ll be guided to the right place to make one. The whole process can be a little complicated but it’s definitely worth doing.
Claim My Tax Back can help you make a claim for Work from Home Tax Relief. Our application is 100% completed online and only takes a couple of minutes.
If your claim is successful, you’ll receive a rebate for the full tax year 2020/21 in the form of a cheque, even if you’ve only worked from home for one day during that tax year.