Tax Relief While Working From Home

27th August 2021

More and more people are working from home, and is becoming the new normal for many businesses but did you know you can claim tax relief while working from home? 

Over half a million people have claimed tax relief working from home this year, and HMRC received over 3 million claims for tax relief in the 2020-2021 tax year. 

If you have been told to work from home by your employer due to the coronavirus pandemic and your household costs have increased because of this, then keep reading as you may be eligible for tax relief and further financial help to power your home whilst working. 

Tax Relief While Working From Home

Test and Trace was launched back in May 2020, and since then, thousands and thousands of people have been ‘pinged’, meaning that they have to self-isolate and either take time off work or work from home.

Between the 8th and 14th July this year alone, over 600,000 people were contacted by the app, which meant that most of those people would’ve had to work from home. 

When you get ‘pinged’ from the NHS Test and Trace app, you are required to self isolate for 10 days or longer depending on test results and symptoms - even if you have continuous negative results.

Working from home can be difficult and can increase the water and electricity bill, but some people aren’t able to work from home, and simply have to sacrifice 10 days of payment.

The good news is that employers can now pay employees up to £6 a week tax-free without them having to provide evidence of an increased bill.

Employees that haven’t received any working from home expensive payments directly from their employer can apply through HMRC to receive tax relief. 

Based on your tax bracket, you can claim tax relief - e.g, if you pay the basic 20% tax rate and claim tax relief on £6 per week, then you’d typically receive £1.20 in tax relief per week toward the cost of your water, electricity, wifi, and other household bills.

If your tax bracket is higher, then you could receive £2.40 per week in tax relief (which equates to 40% of the £6 per week). Over a tax year, you could save either £62.40 or £124.80 in tax. 

How Do I Claim For Tax Relief?

If you think you may be eligible for tax relief, then you can claim tax relief for working from home directly through the government website (gov.uk) for free.

Using the gov.uk website is an easy process, and won’t take up too much of your time.

You need to know your government gateway ID and password, but if you’ve forgotten, you can always go through the password reset process.

Before you log into the gov.uk website, you’ll need to check if you’re eligible for the tax relief - however, you can still fill in the details if you’re not sure.

When you’ve logged onto the portal, you’ll need to state exactly when you started working from home.

If you don’t know when you’ll be returning to the office, don’t worry as you’ll receive a rebate for the full tax year.

This service only allows you to claim expenses for working from home - for any other expenses, you must go through a different process. 

It won’t take long for your application to be approved, and once approved, your tax code will be adjusted for the 2021 to 2022 tax year.

If you fill in the relevant details correctly, you’ll receive 100% of the tax relief due. This means that you will receive the tax relief directly through your salary, but only until March 2022.

Don’t worry if you didn’t claim last year, as HMRC can accept backdated claims from up to four years ago - and if you were eligible for tax relief last year, you’ll receive the funds in a lump sum. 

If the standard tax relief doesn’t cover everything that you’ve had to fund while working from home, you can always claim for more.

However, in order to do this, you must provide evidence of your outgoings - this can include water bills, electric bills, and wifi bills. 

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