How can I claim my tax relief for working from home?

In 2020, working from home became very popular due to the Coronavirus outbreak. Looking at the trend of hybrid working arrangements, working from home will not be leaving us any time soon.

Even though some of us are slowly returning to the workplace, the HMRC has stated that employees can still claim the use of their homes as an expense. This still applies even if they will not be using it for the whole of the 2021/22 tax year.

In this blog, I will be explaining how you can claim tax relief for using your home for business in the UK.

There are two main methods of claiming this tax relief which are:

Method 1

An employee can claim tax relief for a portion of their home expenses.

These expenses may include; Heating, Electricity, Mortgage interest, Rent, Council tax, Internet or Telephone bills. 

They would have to apportion these expenses reasonably by using the number of rooms in the house and the amount of time spent using the room.

The only disadvantage to this method is that you must keep all the bill receipts, contracts, etc. for the expenses that you are trying to claim relief on.

Method 2

As an employee working from home on regular basis for reasons such as Coronavirus, you can claim tax relief to cover some of the expenses for running your home.

This is a flat rate that you can claim at the rate of £6 per week from April 2020. This can result in a total of £125 tax relief in the tax year per employee.

This method of claiming the tax relief is easier as you don’t have to provide evidence of the cost of the household unlike option 1.

How can you apply for this tax relief?

It is a quick and easy process to check if you are eligible and you can apply online.

Click here to check if you are eligible.

The tax relief collected will depend on the tax rate paid by the employee.

This could be 20% of the £6 PW or 40% of the £6 PW. Over the year they would be able to enjoy either £62.40 or £124.80 irrespectively.

You can apply online by clicking here. You may need to set up a government gateway ID if you do not already have one.

To open a government gateway ID, you will need your national insurance number and a recent payslip or 60

What happens once this claim has been made?

Once this tax relief has been claimed, the taxpayer could either receive a tax refund of £62.40 or £124.80.

This may not sound like a lot, however,  Every Little Helps!

If you have worked from home in the last 4 years, you may go ahead to claim a flat rate for the last 4 tax years as well.

The tax code for the current year for this employee will also be increased which means, more tax refunds and reduced tax to be paid in 2021/22.

Conclusion

Even if you work from home for just a day in 2021/22, you can still claim the tax relief from working from home in the tax year.

However, you should note that if your circumstance should change next year, you must inform HMRC so that you don’t end up claiming for tax relief that you are not entitled to.

If you would like us to support you with the tax issue raised in this blog or you would like us to support you with other tax issues, kindly contact us by clicking here.