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You may have heard of the tax relief from home. But what is it Are you eligible? And if so, how do you claim it? Here’s what you need to know.
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Tax breaks from home: what is it?
If your job requires you to work from home, HMRC can provide you with tax breaks for additional expenses you have incurred, such as: B. higher energy bills.
The tax break for working from home is not a new system. The pandemic has forced many people to work from home and millions can now claim it.
You do not need to have been asked to work from home by your employer to be eligible. If the NHS Test and Trace tells you to self-isolate, or the NHS app pings you on a note to isolate, then these are absolutely valid reasons to work from home.
How much tax relief can I claim?
To speed up the process of handling many thousands of applications over the past two years, HMRC says anyone who has to work from home for at least one day can claim £ 6 per week for the entire tax year as long as you are additional costs were incurred (although you do not need to provide evidence). This applies to the tax years 2020/21 and 2021/22.
If you think your additional costs are more than £ 6 per week you will need to provide proof. You’ll also need to provide receipts if you want to claim tax breaks on equipment bought for home work, such as laptops or chairs. For more information on this point, please see our article on How To Get Coronavirus Tax Relief When You Work From Home.
How can I apply for tax relief for working from home?
If you are an employee, you have two options for taking advantage of tax breaks from home.
1. Via the gov.uk website
Due to Covid-19, HMRC has launched a special microsite to process the thousands of claims. To use the service, you must have (or register for) a Government Gateway ID.
2. About your employer
As an alternative to filing your own application, your employer can also pay you the tax relief. However, you are not required to do so, so you may need to apply directly to HMRC.
Once you have made a claim, HMRC will change your tax number accordingly.
Can the self-employed make a claim?
If you are self-employed and had to work from home for at least one day, you can also claim the entire tax years 2020/21 and 2021/22. However, you cannot do this through the gov.uk microsite. Instead, you have to file the tax return as part of your self-assessment.
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Like employees, you can claim for the last four tax years, but for 2018/2019 and 2019/20 only for days when you had to work from home, when you had higher expenses, and not for the entire tax year.
If you work from home more than 25 hours a week, you may be able to use HMRC’s simplified expense system to calculate any tax breaks you may be entitled to.
What is 6 € after tax worth?
The £ 6 benefit is higher for those paying the highest income tax rates.
For example, if you pay the 20% property tax rate and claim £ 6 per week, the relief is £ 1.20 per week or £ 62.40 per year. Taxpayers with a higher tax rate (40%) will be better off £ 2.40 per week or £ 124.80 per year. Taxpayers with an additional tax rate (45%) benefit from £ 2.70 per week or £ 140.40 per year.
While £ 6 seems like an arbitrary number, it is likely that HMRC settled on that number due to the cost of evaluating individual claims as millions of people are forced to work from home due to Covid-19 . This is also the likely reason for HMRC’s generosity in allowing anyone to apply for a full tax year regardless of the number of days actually worked from home.
Working From Home Tax Break: What Else Should I Know?
1. It can be a bigger saving than you might think
While £ 6 a week might not seem like much, your claim could be worth up to £ 280 in the last two tax years. If you are using HMRC’s microsite, filing a claim should take no more than a few minutes.
2. Couples in the same household can both claim tax relief for working from home
If you live in the same household with your partner, don’t think that you can’t make both claims even if you share the utilities. Tax relief from home is an individual benefit.
3. Part-time employees can also make claims
If you work part-time, you can claim relief just like full-time employees.
4. If you have submitted an application for the tax year 2020/21, you must submit a new application
If you submit an application for tax relief from home for the 2020/21 tax year, you must submit a further application if you would like relief for the current tax year.
If you did not submit an application in the last tax year, you can submit an application for both years (21.2020, 2021.22.) This year.
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