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Take advantage of tax breaks from your time working at home

Take advantage of tax breaks from your time working at home

Jonathan Green

Please click the link if you would like information on May 17th Work From Home Day.

Employed persons

If your employer requires that you work from home, which will apply to many employees during the various COVID lock-down periods, HMRC will allow you to claim for any extra costs associated with working from home. The rules regarding this were relaxed from the start of the first COVID lockdown and before then it was much more difficult to satisfy the qualifying conditions.

To save you calculating what these extra costs might be, HMRC has agreed a fixed rate claim based on their estimate of the average extra costs you may experience if working from home.

The choices you have are therefore:
  • £6 a week from 6 April 2020 (for previous tax years the rate is £4 a week) – you will not need to keep evidence of your extra costs
  • the exact amount of extra costs you’ve incurred above the weekly amount – you will need evidence of this such as receipts, bills or contracts

You will 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 will get £1.20 per week in tax relief (20% of £6).

Additional costs this is intended to cover include things like heating, metered water bills, home contents insurance, business calls or a new broadband connection that are likely to have increased when working from home. They are not intended to cover costs that would stay the same whether you are working at home or in an office, such as mortgage interest, rent or council tax.

You cannot claim tax relief if it is your own choice to work from home.

Self-employed persons

If your self-employment working from home activities take up more than 25 hours a month you can claim based on the following agreed flat rates per month or as above, you could work out the actual additional costs and claim those instead. The HMRC agreed rates for the self-employed are:

HMRC agreed rates
Hours of business use per month Flat rate per month
25 to 50 £10
51 to 100 £18
101 and more £26

If you need assistance with the above please get in contact with your local Moore (South) office.