If you are an employee working from home due to Covid-19, either for all or part of the week, your household expenses such as heating, business telephone calls etc. may be higher as a result of your home working.
From 6 April 2020, your employer can pay you an allowance of £6 a week towards this increase, prior to 6 April 2020 the sum was £4 a week. If your employer has not paid you this allowance you can make a claim to tax relief yourself.
You can either claim tax relief on £6 a week or on the exact amount of extra costs you have incurred above the weekly rate of £6 a week. You cannot claim for costs that would remain the same whether you were working from home or not, such as mortgage interest or council tax. If you wish to claim the exact amount of extra costs you will be required to provide evidence. No evidence is required to claim at the rate of £6 a week.
The tax relief you receive will be based on the rate of tax you pay. If you pay tax at 20% you will receive tax relief of £1.20 a week on £6. If you pay tax at 40% your tax relief will be £2.40 a week.
You may also be able to claim relief for equipment you have bought to enable you to work from home but, in order to obtain relief, the equipment must be necessary for you to do your job and there must be no significant private use of the equipment. Significant use is not defined by HMRC. If your employer paid you any money towards the cost of the equipment you should reduce your claim by the amount you received.
Other job related expenses that you may be able to obtain relief for include: repairing or replacing tools if you are required to provide your own; cleaning, replacing or repairing specialist work clothing such as a branded uniform or safety boots; fees and subscriptions you pay to a professional body. If you are required to travel as part of your employment you can claim expenses for mileage and overnight expenses. You should only claim these if you have not been fully reimbursed by your employer.
Making your claim
Those who complete a tax return should claim their expenses on their annual return. Employees who do not need to complete a return can use the online portal launched by HMRC on 1 October. It is possible to check to see if you can make a claim by answering a few questions. You will then be told whether you can claim your tax relief online or must claim via your tax return. If you can claim online, you will need to set up a Government Gateway account for which you will need your national insurance number, a recent payslip or a valid UK passport. Once you have your Gateway account you can follow the instructions to claim your tax relief. When your application is approved, HMRC will adjust your tax code for the current year, 2020/21 and you will receive the benefit of the relief to the end of March 2021.