How to claim tax relief if you’re working from home

Even as lockdown restrictions come to an end, many employees are still being forced to work from home due to self-isolation or concerns for their health and safety.

The good news is that the government is offering up to £125 in tax relief for all employees who have worked from home so far in the 2021/22 tax year - even if only for 1 day.

Almost 800,000 Brits have already claimed the rebate for working from home since April 2021, according to figures from HMRC. In this article, we explain who is eligible for tax relief, how much you could get, and how to apply.

Who is eligible for tax relief for working from home?

You will need to check whether or not you are eligible to receive tax relief for working from home. To claim, you must:

• Only be claiming for expenses for working from home (other expenses must be claimed separately).
• Not pay tax by self-assessment (as you will 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.

If all of these apply to you, you can visit the government’s “Claim tax relief for your job expenses” webpage, where its eligibility tool will check your details and begin your application. You will receive a rebate for the full tax year, even if you do not know what date you will be returning to the office, and even if you have only worked from home for 1 day.

If your claim is successful, your PAYE tax code will be changed, so you will be recorded as having to pay less tax on your income.

How much tax relief could you get?

The tax relief you are entitled to depends on your income tax band. All taxpayers can get a flat rate of tax relief on £6 a week.

• Basic-rate taxpayers will gain £1.20 a week (20% of £6), which equates to £60 a year.
• Higher-rate taxpayers can gain £2.40 a week (40% of £6), which equates to £125 a year.

The rebate application page on the government website allows you to apply both for the current and previous tax year, meaning you could get up to £125 for 2021/22 plus a further £125 for 2020/21 if you did not claim last year.

HMRC has said that it will accept backdated claims for up to 4 years. The work-from-home recommendation was first introduced towards the end of the 2019/20 tax year, so you could also claim for that.

Altogether, if you have worked from home for at least 1 day across each of the 2019/20, 2020/21, and 2021/22 tax years, you could claim up to as much as £375.

What if the flat-rate is not enough to cover your costs?

If the standard flat-rate per week does not cover enough of the extra costs you have incurred due to working from home, it is possible to claim more - but you will have to provide evidence of your increased outgoings. The amount you can claim depends on whether you are employed or self-employed.

Employed

Employed workers can only claim tax relief on expenses that are solely used for work purposes. This can include things such as extra energy costs to power your work area or the additional cost of business calls that have been added to your phone bill. Keep in mind that you cannot claim for things that are used for both private and business use, such as your rent or broadband, so you will have to find alternative ways to cut those costs yourself. Check out our 25 money-saving tips that could save you thousands.

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 required for you to work. To work out the proportion, you will need to record the amount of time you are using your home specifically for work, and in some cases the size of the area within your home that is used for it.

If you work from home for more than 25 hours per week, you may be able to use HMRC’s simplified expenses system. You can only claim your 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 then be deducted from your profits, which will reduce your overall tax bill at the end of the year.

How to claim tax relief for working from home

To claim your tax relief rebate for working from home, you can apply directly via GOV.UK for free here.

Once your application has been approved, the online portal will adjust your tax code for the 2021/22 tax year. You will receive the tax relief directly through your salary until March 2022.

How to save more money while working from home

If you want to save even more cash, or if you do not qualify for tax relief, we have some other advice on how to cut costs while working from home. Try our “7 tips to help you save money if you’re self isolating or working from home”.