COVID-19: What you can claim when working from home

The working from home rules haven’t changed, but are certainly more relevant than ever as larger numbers of employees are required to work from home due to the Covid19 pandemic. 

HMRC have confirmed that if you have to work at home on a regular basis you are entitled to claim tax relief.   If you simply choose to work from home no relief is available.  HMRC’s guidance indicates that where an employee is working from home due to COVID-19 either because the employee’s workplace has closed or the employee is following advice so self-isolate, a homeworking arrangement will exist for this period. In any other case where an employee is working from home it is advisable to agree with the employee in writing that homeworking arrangements exist.

Homeworking exempt amount
From 6 April 2020 you can either claim tax relief, or your employer can pay you, up to £6 a week (£26 a month) to cover your additional costs if you have to work from home. For previous tax years the rate is £4 a week (£18 a month).  If this option is taken you will not need to keep any records.  Employees who wish to deduct more be expected to keep records and to be able to show how their figure has been calculated.

Allowable costs
If you wish to calculate actual costs these must be qualifying (i.e. to do with your work), for example:
  • business telephone calls
  • the extra cost of gas and electricity for your work area (heating and lighting costs)
  • any additional insurance
  • metered water 
Not allowable
You cannot claim for things that you use for both private and business use, for example:
  • mortgage repayments (including interest)
  • rent
  • council tax
  • water rates
Broadband access is also not allowable unless this was not previously available and was installed specifically to work from home.

Employer provided assets
Employers can provide the necessary office furniture, equipment and internet connections for a homeworker, without there being a liability for the employee so long as:
  • the sole purpose is to enable the employee to perform the duties
  • private use is insignificant
However, one exception to note is that the provision by an employer to an employee of one mobile phone and SIM card including any line rental and calls for that phone paid directly by an employer is exempt from tax irrespective of whether there is any private use.

Employee provided assets
Generally, where an employee provides their own equipment in order to work at home no tax relief is available for the cost of that equipment.  However, where plant or machinery, such as a computer is necessarily provided by an employee, for use in the performance of the duties, the employee may be entitled to a deduction by way of capital allowances for depreciation related to its business use.

Employer reimbursements
Employers can pay or reimburse qualifying expenses in full.  For example, the reimbursement by an employer to an employee of the cost of purchasing stamps, stationery etc.

However, the reimbursement by an employer to an employee of the cost of purchasing, for example, office furniture, computers, printers etc is taxable. The position may, however, be different where an employee makes a payment on their employer’s behalf. For example, where an employer authorises an employee to purchase a monitor on the employer’s behalf for delivery to the employee’s home and for use by the employee in the performance of their duties. It would be advisable to seek tax advice in these circumstances.

Travel
Where an employee performs substantive duties of their employment at home as an objective requirement of the job, their home is likely to be a workplace for the purposes of the ‘travelling in the performance of the duties’ rule.

However it is important to note that where an employee is required to work at home on some days and at their company’s offices on others, the travel between home and the company’s offices on the days they are required to be there will be ‘ordinary commuting’ and not tax deductible.

Where an employee uses their own vehicle for a qualifying business journey an employer can make an “Approved Mileage Allowance Payment” (AMAP) to the employee. The approved mileage rates are 45p per mile for the first 10,000 business miles each tax year and 25p per mile thereafter. These payments are tax and NIC free. Where payments exceed the approved rates, the excess is taxable. 

For further advice on this or any of the support measures available during the coronavirus crisis, please contact your local Moore adviser

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