Claim expenses for additional costs of working from home

As the 2020/21 tax year draws to a close, many employees will have spent much if not all of the last year working from home. While the tax system enables employers to pay employees a tax-free allowance of £6 per week (£26 per month) to cover the additional household costs of working from home, employees with less generous employers can also benefit to a degree by claiming tax relief for the extra household costs that they incur as a result of working from home.

How much?

Employees can make a claim for £6 per week (£26 per month) without the need to provide evidence to prove that they have incurred additional costs of working at home. However, if the actual additional household costs are higher (and the employee is able to provide evidence to substantiate this if asked), they can claim the higher actual amount.

Relief is given at the taxpayer’s marginal rate of tax. Thus, an employee making a claim for a full year of £312 (12 x £26) will receive tax relief of £62.40 if they are a basic rate taxpayer, £124.80 if they are a higher rate taxpayer and £140.40 if they are an additional rate taxpayer.

How to claim

There are various ways in which a claim can be made. If the taxpayer completes a self-assessment tax return, a claim can be made in their tax return.

HMRC have also set up an online claim site, which is available on the Gov.uk website. Claims can also be made on form P87. This too is available on the Gov.uk website.

Partner note: www.tax.service.gov.uk/claim-tax-relief-expenses/only-claiming-working-from-home-tax-relief?_ga=2.38206443.931834769.1613673833-937310271.1612354215; form P87 www.gov.uk/guidance/claim-income-tax-relief-for-your-employment-expenses-p87)