UPDATE: The below blog is also relevant to the working tax year 2021-2022.
Have you been required to work from home because of the pandemic? If so, you can claim tax relief for additional household costs incurred due to working from home.
You can’t claim if you chose to work from home. However, you can claim if you were required to work from home because of Coronavirus and incurred additional costs.
Additional household costs include things like heating, water, contents insurance, business calls or a new broadband connection. Sometimes you can also claim tax relief for equipment that you have bought.
This year only, you can claim for the full year even if you’ve only had to work from home for one day this year. That means you only need to claim once, and you’ll automatically get tax relief on £6/week for the entire year.
This is because HMRC have recognised that this year is very different and working from home is very fluid this year. They want people to make just one claim to reduce the administration effort required at HMRC.
So, if you claim using the new online service, you automatically get relief for the entire year, and you can backdate it to 23rd March when lockdown started.
How much can I claim?
You have two options for claiming:
The first is to claim tax relief on £6 a week from 6th April 2020. For this option, you don’t need to provide evidence of extra costs.
Otherwise, if you think that your extra costs have been more than this, then you can work out exactly how much extra you’ve spent. You’ll need to provide evidence such as receipts, bills or contracts that prove what you’ve spent and show that the increased costs are solely due to working from home. Then you can claim tax relief on this amount.
You get tax relief based on the rate at which you pay tax- if you’re a basic rate taxpayer, that means you’ll get 20% tax relief, so you would get £1.20 per week of tax relief on £6 a week. That is £62 a year. If you’re a higher rate taxpayer, it’s £124 for the year.
How do I claim?
If you’re an employee claiming for the first time this year, you can claim online here. It only takes a couple of minutes. Note that you won’t be paid cash, rather your tax code will be changed so you’ll pay less tax for the rest of the year.
If you’ve already made a claim for this tax year, you’ll need to resubmit a P87 form for the whole tax year.
If you fill out a self-assessment form, then you can claim as part of your self-assessment.
If you have been required to work from home previously, you can claim back up to four years’ tax relief. You’ll need to fill out a P87 for previous years, and unlike in 2020, when you can claim for the entire year, you can only claim for the periods you have been working from home.
For more advice and support through the current crisis, visit our coronavirus hub here.