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Up to £125 ‘bonus’ from HMRC for all employees working from home!

By Kevin Russell | 14 December 2020

In accordance with the Government’s COVID-19 Guidance, many of us have been required to work at home for some or all of the period since March 2020. There are of course increased costs associated with this such as heating and lighting, metered water charges, telephone and so on. Where these costs have been incurred as a result of being required to work from home, they are tax deductible if not reimbursed in full by your employer.

Given that charities (and other employers) are suffering significant falls in income as a result of COVID-19, many employers may be unable to reimburse these costs.

Ordinarily, there are two ways that an employee can claim tax relief for the additional costs of working from home: Either calculate the exact additional costs and make a claim to HMRC for that, or alternatively, claim an HMRC agreed fixed amount for each week in the tax year that was worked at home. However, HMRC recently announced a relaxation of these rules for 2020/21 only, in view of the COVID-19 pandemic. Employees whom have worked at home at any point in the tax year 2020/21 will be able to claim for the whole tax year.

How much can be claimed?

From 6 April 2020, HMRC accept that £6 per week can be claimed as additional costs without the need to provide any evidence of those costs. Prior to 6 April, the figure was £4.

If the additional costs amount to more than £6 per week, tax relief on a higher amount can be claimed but will need supporting evidence such as receipts, bills or contracts.

For simplicity, most people will want to claim the £6 flat rate – that is, £312 for the whole year.

For a basic rate taxpayer, this equates to a tax reduction of £62 (£312 x 20%). For those paying tax at the higher rate, it is £125 (£312 x 40%).

How do I claim?

If you normally complete a Self Assessment Tax Return, you will need to claim on the return form by entering £312 in the relevant employment expenses box of the return (Box 20 of the Employment pages on the full return, SA100 and Box 2.5 on the short form return, SA200).

For others, you can claim by visiting Claim tax relief for your job expenses: Working from home - GOV.UK (www.gov.uk). If you claim online, you will need a Government Gateway user ID and password. (This takes about 10 minutes Ideally, you should have your National Insurance number and a recent payslip or P60 or a valid UK passport to hand).

What if you work part time, or go back to your workplace?

For 2020/21 only, HMRC has confirmed that everyone will be able to claim £6 per week for the whole of the tax year. This is the case regardless of the fact that you may be part time, only required to work at home on certain days of the week, or return to the office prior to the end of the tax year. This is because HMRC recognise the fluidity of the current situation and do not want to be inundated with enquiries over relatively small claims.


Read more...

Claim tax relief for your job expenses: Working from home

COVID-19: Guidance and resources for churches, charities and Christian workers

Posted by Kevin Russell

Our Legal Eagle guru and Stewardship's Technical Director, Kevin constantly has his finger on the pulse of all things tax and charity law-related. His briefing papers for charities, churches and individuals are an invaluable resource on everything from VAT to Gift Aid. 

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