Tax Relief When Working From Home

19 October, 2018

Working from home for at least part of the working week is more common than ever. But is there any tax relief for employees who work from home and incur costs in doing so, but don’t receive any reimbursement for these from their employer?
The relevant legislation states that the employee can only claim relief for expenses that are wholly, exclusively and necessarily incurred in the performance of their duties. In order to claim relief, the employee must first show that their home is a workplace. HMRC will accept that a home is a workplace where:

  • The employee performs substantive duties while working from home. Substantive duties are the tasks that employees must carry out which form all or part of the central duties of their employment.
  • The duties require the use of appropriate facilities and such facilities are not available to the employee on the employer’s premises, or the employee lives so far away from the premises it is unreasonable to expect them to travel there on a daily basis.
  • At no time before or after the employment contract is drawn up is the employee able to choose between working at home or at the employer’s premises.

An employee who can show that their home is a workplace can claim relief for the following working from home expenses:

  • the additional unit costs of gas and electricity consumed while a room is being used for work
  • the metered cost of water used in the performance of the duties
  • the unit costs of business telephone calls.

It is often not practical to calculate extra costs, so a claim for £18 per month for monthly paid employees (£4 per week otherwise) can be made without having to justify the figure. This does not cover the cost of business phone calls, for which an additional claim can be made based on the actual costs.
An employee cannot claim relief for the following working from home expenses, in general, as because the employee will not pay more as a result of working at home:

  • Council tax
  • Rent
  • Water rates
  • Insurance

An employee can make a claim online for working from home expenses , by phone, by post or, if they are registered for self-assessment, through the tax return. HMRC has online help to guide employees to the most appropriate method for their circumstances.

Blog post by: Ian Marlow

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