Increasingly, employers are asking employees to work from home. However, this comes with additional household costs for them. Nevertheless, there is tax relief available.
The additional costs your employees can claim for include heating, water bills, business calls or even broadband connection.
How much can you claim:
Employees can claim a flat fee of £6 a week without the need to justify the amount claimed. No records or additional receipts are required.
This fee will trigger a refund of £1.20 per week for a basic rate taxpayer and £2.40 for a higher rate taxpayer. That’s a total £62.40 per year for a basic rate taxpayer or £124.80 for a higher taxpayer.
There are two ways to claim:
- An allowance paid tax-free to your employees – You can pay an employee £6 a week, tax-free, to cover their additional costs.
or
- Claim direct via HMRC – your employees can claim either on their self-assessment tax return or via a P87 form available here: https://www.gov.uk/tax-relief-for-employees/working-at-home. To complete the form, your employees will need your PAYE reference.
Since Oct 2020, HMRC changed the system, so you get a whole year’s relief
As a one-off, due to Covid-19, you can claim for the whole tax year at the £6/week relief rate. If you have worked at home at any point since 6 April and you have higher costs, you can claim today.
You may already be claiming
It should be noted that we may already claim this on your behalf in your accounts – if you are unsure, then please do check with us.
