Claim tax back for working from home

People working from home for even a single day this year will be able to claim tax relief against increased costs as the fallout from the Covid-19 pandemic rolls on.

HM Revenue & Customs have confirmed that the work from home tax relief scheme is being extended for the entirety of the 2021/22 tax year.

Anyone eligible to claim the work from home for tax relief last year can also still do so. This means eligible taxpayers can now apply for the work from home tax relief for both the 2020/21 and current tax year.

The Government is still advising people to work from home if possible, meaning millions of people are likely to be eligible to apply for the tax relief again this year. 

HMRC have said that: ‘Customers can claim for the entire 21/22 tax year even if they’ve only worked from home for one day so far. 

‘However, when doing so, they have to agree to a declaration form which says they have to be able to demonstrate the additional costs (such as heating, metered water bills or business calls) have been incurred wholly, exclusively and necessarily as a direct result of working from home. 

‘They don’t include costs that would stay the same whether they are working at home or in an office.

‘It is important to highlight that to qualify for the tax relief, the employee must carry out work which form all or part of the central duties of their employment.’ 

The application process is pretty quick and straightforward and can be completed online via the Government’s website.

You’ll need a ‘Government Gateway’ user ID and password to claim. You can create a user ID if you do not already have one. 

If successful, the claim will alter your tax code and you should start seeing your pay packet rise slightly as the tax relief kicks in.

Here are some of the main points to consider if you are considering applying for the work from home tax relief: 

Am I eligible to claim working from home tax relief?

On its website, the Government says people can apply for the tax relief if they have to work from home for all or part of the week on a regular basis.

It adds: ‘This includes if you have to work from home because of coronavirus (COVID-19).’ 

However, you cannot claim tax relief if you choose to work from home. 

The work from home tax relief is an individual benefit. But, if you live with others who have to work from home, they can claim for the tax relief too. 

If you fill in a self-assessment form to pay your taxes, you won’t be able to use the Government’s online ‘microservice’ to apply for the tax relief, but you will be apply via your self-assessment form, whether this is completed online or via post.

What extra costs can I claim the tax relief for? 

There are rules about what extra costs you can and can’t claim the working from home tax relief for. 

The Government says: ‘Additional costs include things like heating, metered water bills, home contents insurance, business calls or a new broadband connection. 

‘They do not include costs that would stay the same whether you were working at home or in an office, such as mortgage interest, rent or council tax.’

When signing up for the working from home tax relief, you will have to sign an online declaration stating that the extra costs have emerged as a result of having had to work from home.

How much can you claim for?

There are two options.

For the current tax year, you can claim £6 a week without having to show or provide any evidence of the extra costs you’ve incurred by working from home. For most people, this is likely to be the most straightforward option.

Alternatively, you can choose to claim for the exact sum of extra costs you incur working from home each week, if this is more than £6 a week. 

To do this ‘you’ll need evidence such as receipts, bills or contracts’, the Government’s website says. 

How much tax relief will I get?

The amount of tax relief you get will, like last year, depends on what income tax band you are in, HMRC says.

If you pay the 20 per cent basic rate of tax and claim tax relief on £6 a week you would get £1.20 per week in tax relief, which is 20 per cent of £6. 

A higher, or 40 per cent, rate taxpayer can get £2.40 worth of tax relief a week if they claim for the £6 a week worth of extra costs incurred by working from home.

So, for the entire 2021/22 tax year, the total work from home tax relief would be around £62 for basic rate taxpayers, or around £124 a year for higher rate taxpayers, assuming the £6 a week option is selected.