It has always been possible as an employee where you are working from home on a regular basis either for the entire week or part of the week and incurring additional costs to claim income tax relief. This is on the basis that there is an agreed homeworking arrangement in place with your employer and you have not chosen to work from home.

With the pandemic, for many of us this is the longest period we have probably worked from home and not in the office. As such for the 2020/21 and 2021/22 tax years, the rules on working from home have been relaxed by HM Revenue & Customs and it is possible for income tax relief to be claimed for either a fixed sum or for the following costs:

  • Gas and electricity
  • Metered Water
  • Business phone calls

You are not able to claim for the whole amount of these costs, but only the proportion which relates to the work performed at home.

A claim can only be made if you have not been reimbursed by your employer for the costs.

How much can be claimed?

The simplest method for the 2020/21 and 2021/22 tax years is to claim a fixed amount of £6 per week, so a total of £312.

The income tax savings are as follows:

Basic Rate Taxpayer (20%) £62.40
Higher Rate Taxpayer (40%) £124.80
Additional Rate Taxpayer (45%) £140.40

Under the alternative method described above, you will need to calculate the exact cost over and above your weekly or monthly bill for gas, electricity, metered water and business phone calls. For this method you will need to keep detailed records and evidence such as bills and contracts. The tax relief obtained will be at the rate at which you pay income tax.

How to make a claim?

A claim can be made by any of the following:

  • By claiming on your self-assessment tax return if you are already in self-assessment.
  • By calling HM Revenue & Customs.
  • By applying online at HM Revenue & Customs micro-service.

Once the pandemic is over then any future claims for working from home will need to be considered based on the working from home arrangements in place pre COVID.

Here at Plus Accounting we will be very happy to help you with your personal tax affairs with our personal tax services.

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Author: Anthony Barron, Personal Tax Manager @ Plus Accounting

Any views or opinions represented in this blog are personal, belong solely to the blog owner and do not represent those of Plus Accounting. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.

Date Published: 14 May 2021