Claim your tax relief for working from home

If you have been working from home during the pandemic, don’t forget you could be due some tax relief.

Employees, required by their employers to work from home (WFH, as it has become known), have been able to claim tax relief long before the pandemic hit. The relief is designed to recoup the additional costs of WFH, such as paying for heating, lighting and business phone calls.

In theory a claim can be made for the actual extra outlay incurred if those costs are supported by appropriate records. In practice, the alternative of claiming a flat weekly relief amount set by HMRC is much simpler and more widely used.

Until April 2020, that flat sum was £4 a week, but since the start of the 2020/21 tax year it increased to £6 a week. If you are a basic rate taxpayer, the relief is worth £1.20 a week, with that amount doubled if you pay tax at higher rate (£2.44 in Scotland, where higher rate is 41%).

Perhaps you think such a trifling amount is hardly worth claiming, especially if homeworking is limited to a handful of weeks in the year. Before Covid-19 arrived, many took that approach and WFH relief was largely confined to ‘tax nerds’ territory. Unsurprisingly, the pandemic changed matters.

HMRC found itself facing a multitude of claims, many from employees who did not make self-assessment tax returns. In response it implemented two policies:

• In October 2020 it launched an online service (https://www.gov.uk/tax-relief-for-employees/working-at-home), allowing most claims for those outside the self-assessment regime to be made with a few keystrokes; and
• HMRC said that for 2020/21 it would pay a full year’s tax relief (£62.40 for a basic rate taxpayer and £124.80/£127.92 for higher rate taxpayers) regardless of the number of WFH weeks in the tax year.

HMRC recently confirmed that the same process will apply for the current tax year. Last year over three million taxpayers registered a claim and so far over half a million have claimed for 2021/22. If you have not claimed for 2020/21 yet, you still can.

The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.