Working from home tax relief allows individuals to claim back some expenses incurred while working remotely. Eligible costs typically include electricity, heating, and broadband bills.
However, purchases of equipment like laptops or office furniture are not covered. Claiming the relief differs based on the tax year.
From 2022 onwards, individuals can claim it during or after the tax year. They can do so by submitting receipts and utility bill images via the Receipts tracker on ‘PAYE Services’ in myAccount.
After the tax year ends, they can claim it by reviewing their tax information on myAccount and selecting ‘Remote Working Relief’. This process aims to ease the financial burden associated with working from home.
What Are The Expenses Eligible for Tax Relief?
Tax relief for e-working covers additional costs associated with working from home, including:
- Electricity
- Heating
- Broadband
Expenses for items like laptops, computers, office equipment, and furniture aren’t eligible for Remote Working Relief, despite their work use. If your employer provides work-related equipment like a computer or printer, mainly used for work, it’s not a taxable benefit-in-kind.
This means you are not liable to pay tax on the provision of such equipment. Consequently, you are not liable to pay any tax for receiving this equipment from your employer.
How much is the working from home tax relief worth?
The value of working-from-home tax relief varies depending on the agreed rates set by HM Revenue & Customs (HMRC).
Agreed Rates
Until the 5th of April 2020, the agreed rate stands at £4 per week. After the 5th of April 2020, the agreed rate increases to £6 per week.
Tax Rebates
For basic rate taxpayers, the tax rebate is £1.20 per week or £62.40 per tax year. Higher-rate taxpayers receive £2.40 per week or £124.80 per tax year.
Additional rate taxpayers receive £2.70 per week or £140.40 per tax year.
Exact Costs Incurred
Taxpayers have the option to claim the exact amount of costs incurred. However, evidence demonstrating the additional costs incurred from working at home is required if claiming more than the agreed rates.
How to calculate the amount you can get tax relief on?
To calculate the amount of costs eligible for tax relief for working from home, follow these steps:
Add Up Expenses
Add your electricity, heating, and internet costs. For the years 2020 and 2021, use different rates for electricity/heating (10%) and internet (30%).
Calculate Total Costs
Multiply the total costs by the number of days worked at home. Divide by 365 (or 366 for leap years).
Determine Allowable Costs
Multiply by the applicable relief rate (30% for internet, 10% for electricity/heating).
Amount of Tax Relief
Tax relief is applicable at a rate of 20% or 40%, whichever is the highest rate of income tax you pay. Subtract any allowances provided by your employer from the total amount you can claim back from Revenue.
Example 1 (Mary in 2021)
Mary worked from home for 9 months, totaling 168 working days. Heating and electricity bills: €1500, Broadband: €450.
She can claim:
- €69 for heating and electricity.
- €62 for broadband.
Total claimable amount: €131. Tax relief at 40%: €52.40, at 20%: €26.20.
Example 2 (Sharon and Lar in 2020)
Both worked from home for 181 days. Heating and electricity bills: €1950, Broadband: €600.
Each can claim:
- €48 for heating and electricity.
- €45 for broadband.
Total claimable amount per person: €93. Tax relief at 40%: €37.20, at 20%: €18.60.
Who Can Claim Tax Relief?
You are eligible to claim tax relief if:
- Your job necessitates remote work due to living far from your office.
- Your employer lacks a physical office space.
Who Cannot Claim Tax Relief?
You cannot claim tax relief if:
- Your decision to work from home is discretionary, such as when your employment contract permits remote work either part-time or full-time.
- You are working from home due to coronavirus (COVID-19) restrictions.
- Your employer has an office, but occasionally you are unable to access it due to capacity issues.
How to claim Remote Working Relief?
The process for claiming Remote Working Relief varies depending on the tax year.
Claiming in Real-Time
Utilize the Receipts tracker in the ‘PAYE Services’ card within myAccount to claim the relief for the current year.
Claiming After the Year’s End
- Sign in to myAccount.
- Access the ‘PAYE Services’ card.
- Choose ‘Review Your Tax’ and select the relevant tax year (e.g., 2023 Income Tax year).
- Select ‘Submit’ and navigate to ‘Tax Credits and Relief’.
- Under ‘Your job’, opt for ‘Remote Working Relief’.
FAQ’s
Is building a home office tax deductible UK?
No, the expenditure on buildings, foundations, and structure for a home office is not tax-deductible in the UK as either an expense or capital allowance against profits.
How do I claim tax back on medical expenses Ireland?
If you are a PAYE (Pay As You Earn) taxpayer in Ireland, you can claim tax relief online using myAccount. For self-assessed taxpayers, use Revenue Online Service (ROS) and complete the health expenses section on your annual Income Tax Return (Form 11).
Final Words
Working from home tax relief provides a helpful way for individuals to offset some of the expenses associated with remote work. This includes electricity and broadband bills.
By claiming this relief, individuals can receive a portion of their costs back, offering financial support during these times of increased remote work.
Whether claiming during the year or after it ends, the process is made simple through online platforms like myAccount. This relief acknowledges the changing nature of work and aims to alleviate the financial strain of working from home.
