Tax Relief

Do business from home tax breaks price £125 a yr

The tax breaks were introduced to help workers cover energy and internet bills (Photo: Adobe)

A tax break for people working from home could be scrapped after a review.

The tax breaks were introduced to help workers cover energy and internet bills and have been extended during the pandemic when people have been told to work from home if possible.

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The rule allows anyone working from home to claim tax relief of up to £125 a year, even if they’ve worked from home for just a single day.

The program was originally intended as a temporary measure and was due to end in April 2021, but was then extended for a further 12 months.

Workers can also backdate claims, meaning anyone who has worked from home due to Covid-19 and has never made a claim is entitled to a two-year payout of up to £250.

A total of 4.9 million successful tax relief applications have been made since March 2020, according to HMRC.

Myrtle Lloyd, HMRC’s Director General for Customer Service, encouraged people not to claim the money until June 2021.

He said: “Now more people are returning to the office, but it’s not too late to apply for a tax break on household expenses if you’ve been working from home during the pandemic.”

“under review” policy

HM Revenue and Customs has now reportedly launched an urgent review of the policy after officials warned the Chancellor she had cost the Treasury nearly £500million during the pandemic, according to The Telegraph.

HMRC is to produce a report for Rishi Sunak which could result in changes to who is entitled to tax relief and how much can be claimed.

An unnamed source told the newspaper: “This is a tax break that existed before Covid and was there for legitimate reasons, but take-up is much higher now so it needs to be looked into.”

Conservative MP Kevin Hollinrake, a member of the Commons Treasury Committee, was quoted in The Telegraph as saying: “It is often in people’s financial and personal interests to work from home, so it does not seem appropriate that there should be tax breaks should for those who choose to work from home rather than being forced into it.

“It’s important that we get people back to work, rather than giving them an incentive to work from home.

“A lot of companies rely on these people being at work, and it’s good for people to be at work because that’s where you learn.

“Therefore, having a tax break doesn’t make sense for societal and economic reasons.”

An HMRC spokesman said: “Tax breaks for work from home are designed to help people with the additional household costs that working from home incurs.

“It was an important form of government support for millions of workers during the pandemic.”

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