Working from home may mean you save money on commuting, but it may bring additional costs for office equipment or phone calls. You can, however, claim tax relief on some of these.
Earlier this week the Prime Minister announced new restrictions to curb the Covid infection rate. Boris Johnson said the restrictions could last six months and, in a u-turn after weeks of encouraging people back to the office, he told people who could work from home to do so. Already a raft of City companies have halted plans to bring employees back into the office. Thousands of staff at firms such as JPMorgan and PwC who had been brought back will now revert to working from home.
While there have been debates about whether people who work from home should be paid less to take into account the lack of commuting costs, working from home does not come without a cost. That can range from everything to office equipment, including ergonomic chairs to prevent back pain – one of the major causes of workplace absence, to telephone and internet costs and general household bills.
In winter, for instance, the heating may need to be on and electricity and gas bills can rise. While some employers do take this into account and provide a lot of support to homeworkers, many don’t.
However, employees who are obliged to work from home, for instance, because their office is closed due to Covid, can get tax relief for some of the bills they have to pay which are linked to their work. This applies whether they have to work full time or part time from home and whether other employees are in the office. It’s a good idea to have evidence of the homeworking agreement in writing.
Tax relief of up to £6 per week can be claimed by employees for expenses including business telephone calls and the extra cost of gas and electricity for their work area. They cannot, however, claim for things that they use for both private and business use, for example, rent or broadband access.
Employees can claim the tax relief through a self-assessment form if they normally submit one, but for most people the best way is through filing a P87 form. This can be done online through a Government Gateway account or by filling out a postal P87 form.
Alternatively, employers can opt to pay homeworking employees up to £6 a week (£26 a month) to cover their additional costs if they have to work from home. These payments are not subject to either income tax or national insurance.
To simplify the process, receipts do not need to be kept. However, if employees want to claim for higher increased costs then they will need to provide evidence of the cost increases.
Employers have been able to make tax-free payments to help homeworking employees since 2003, but the rate was increased significantly in April.
Meawhile, in Spain, which is considering remote working legislation, the government has agreed with trade unions and business leaders that employers must cover all homeworking expenses, including computer equipment and furniture. The benefits would only apply to staff who stay home for at least 30% of their work schedule. Employers will have the right to monitor workers’ online presence while respecting dignity and privacy.