Martin Lewis: Working from home (even for part of the week) due to coronavirus? Claim £6/week tax back on extra costs
If your employer requires you to work at home, you can – and have always been able to – claim for increased costs due to working from home, eg, heating and electricity.
Clearly, right now many firms have closed workplaces and that means across the UK millions of staff are temporarily required to work from home, even if it's just for part of the week, and therefore are eligible to claim for increased costs. HM Revenue & Customs (HMRC) says it will consider claims from employees working at home due to coronavirus measures if their usual workplace is closed.
Yet apportioning these costs is tough. So instead you can, in simple terms, claim a rate of £6/week. You can claim more if your costs are higher, but it becomes a much more labour intensive process.
There are two ways to do this:
- Employers can pay you £6/week extra tax-free. Employers can give you an allowance up to this amount and what they give you is free from tax, so you get it all (to give you more, it will need to make special arrangements).
But right now – with many firms struggling – asking may be bad timing, so instead you can...
- Claim tax relief on £6/wk (worth £1.20/wk at 20% tax, £2.40/wk at higher rate). If your employer won't pay expenses for your extra costs due to necessary working from home, but you have them, then you can ask for the amount to be deducted from your taxable income.
To make the process easy, HMRC says that claims in line with the employers' payment (ie, for £6/wk) will not need to justify that figure – meaning you won't need to keep receipts or prove information.
The impact of a £6/wk claim is the tax savings, that's a gain of £1.20/wk (about £62/year) for basic 20% rate taxpayers, and £2.40/wk (about £124/yr) for higher 40% rate taxpayers.
If you believe you have higher increased costs then you can claim more, but you will need evidence of the cost increases.
What if you're only required to work at home part-time?
Many offices and places of work are 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 to us that as long as you are required to work at 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 at home, say, one day in five and were in the office the rest of the week
... you can still claim the full £6 allowance (whether as a payment from your firm, or as a tax break).
And when filling in the forms – as I explain below – you don't need to say whether it is just part of your working week you're required to work at home.
How to claim the tax relief
If you normally do a self-assessment form, you can claim on it. Yet for most people, this will simply require filling in a P87 form. This can be done through an online P87 form through your Government Gateway account or by filling out a postal P87 form.
You'll be asked for your employer's name and PAYE reference (which you can find on your payslip or P60), and your job title. For postal P87s, you'll also need your national insurance number. The key section for filling in is titled 'Using your home as an office' (pictured below). Assuming you're not eligible for tax relief on other work-related expenses, like uniform tax rebates, leave them blank.
In the online form, there are two boxes:
- 'Amount paid by you'. HMRC has told us that provided you've had increased costs, just put a total amount that's equivalent to £6/wk for the period you've been working from home and that's fine, you won't need to show receipts.
- 'Amount paid to you by your employer'. If your employer hasn't paid you a working from home allowance or reimbursed your homeworking expenses, just put £0.
If you're claiming through the postal form, you'll need to add a 'Using your home as an office' expense manually in the 'Other expenses' section.
You claim retrospectively on expenses had. So, if you're only at home due to coronavirus, it's best to wait until you're back at work (or a few months anyway) then make the whole claim at once. Your tax code will likely be adjusted so you pay less tax over the year, as opposed to you getting a direct refund.
Once you've submitted the claim, if you do it online you may hear back within a couple of weeks. However, obviously if HMRC is under pressure it may take longer.
PS: Had to buy home office equipment if you work from home?
If you've done that and your employer is paying you back, normally this would be a 'benefit-in-kind', which means you'd need to pay tax and national insurance on it. Yet specifically for those working from home because of coronavirus, for this tax year (ending 5 April 2021) your employer can pay you in full, with no tax. There's no need for you to do anything, as your employer does this. However, if it takes tax off, point it to this legislation.
I'd be interested to know how claiming any or all of these allowances plays out in practice via the comments below. Do let me know.
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