News / Tax

Are there tax breaks for working from home?

Many people have been forced to work from home for some or part of the time due to the Covid-19 pandemic. But are there any tax breaks available if you’re home working on a regular basis? Dale Butcher, our Head of Tax Compliance, provides an explanation.

If you are a UK taxpayer, and are required to work from home (rather than choosing to do so) you’re entitled to claim UK tax relief. This includes if you have to work from home because of coronavirus.

The amount you can claim is fixed at £6 per week, or £312 for the year. And just one day of working from home is enough to obtain the allowance for the tax year, so it doesn’t matter if you are working full-time at home, or just occasionally, as long as it’s required by your employer or working situation.

The sheer scale of those working from home has been seen in the number of claims which HMRC has already received. Over 54,800 were submitted in the first 10 days of October 2020 alone, so there is now a dedicated online service which you can use to make any claim. More details are included below.

A few points to remember. The allowance isn’t transferable so only relates to the person who is working from home. However, every person in the household who is working from home can claim this allowance – so if you’re married both you and your spouse can make a claim. You’ll get tax relief based on the rate at which you pay tax. For example, if you pay the 20% basic rate of tax and claim tax relief on £6 a week you would get £1.20 per week in tax relief (20% of £6).

Alternatively, you can claim for the actual additional household expenditure which you’ve had to face as a consequence of working from home. This includes the cost of heating, metered water bills, home contents insurance, business calls or a new broadband connection. Bear in mind it doesn’t apply to those things that you would pay anyway such as your mortgage, rent or Council Tax. However, you will need supporting documentation, receipts and be able to prove to HMRC’s satisfaction, if asked, that the amounts claimed are true and accurate.

Making a claim

If you usually submit an annual Self-Assessment Tax Return, you can make the claim through that process. Otherwise, if you pay tax through PAYE, your claim should be made online. You’ll need a Government Gateway account to make the claim, but can set one up if needed using the same link.

Claims can be made from the start of lockdown, 23 March 2020, up to the end of the tax year on 5 April 2021. Any award will be made through your tax code.