Why can you claim tax relief?
If your employer requires you to work at home, you can – and always have been able to – claim for increased costs, such as energy bills. Apportioning extra costs is tough though, so instead you can claim a rate of £6 a week.
This can be paid by your employer; but given many are struggling right now they might instead tell you to claim tax relief on this payment instead via HMRC. What this means is you don’t pay any tax on this £6 a week amount.
You can claim £1.20 a week if you’re a basic rate (20%) taxpayer, £2.40 a week if you’re a higher rate (40%) taxpayer, or £2.70 a week if you’re an additional rate taxpayer (45%).
So over the year, that’s £62.40 for basic rate taxpayers, £124.80 for higher rate taxpayers, and £140.40 for additional rate taxpayers.
See Martin’s blog: Working from home due to coronavirus, even for a day? Claim a year’s worth of tax relief for full details on how the tax relief works.
How can I claim the tax relief?
HMRC has set up a new dedicated working-from-home tool that automatically applies the whole 2020/21 tax year’s relief via your tax code – making claiming the whole amount very easy. Anyone making a claim for this tax year, who hasn’t already put in a claim, can use it.
To make life even simpler, due to the coronavirus pandemic, for this tax year only (2020/21), you only need to claim once, and you automatically get the benefit for the entire tax year.
In fact, you can actually use it to claim just a smidge before this tax year too. You can use it to make a claim since lockdown started on 23 March 2020 – just put that date in. Do that and you’ll get a refund for the whole of this tax year (which started 6 April 2020) and two weeks extra on top.
You’ll need to have your Government Gateway ID to do it. If you don’t have one, you can create one as part of the process. Along the way you’ll also be asked if you’re claiming any other work-related expenses, and as a note, if you wear a uniform to work, it’s worth reading our Uniform Tax Rebate guide first, to see if you can claim that too.
Don’t expect to receive a cheque for this money though. It is done by altering your tax code, which is what indicates to your employer how much tax to take off your payslip – it should be amended in your personal tax account within a couple of days. The result will be less tax taken off each month for the rest of the year which means you’ll take home more.