During the height of the coronavirus pandemic, nearly half of all adults in the UK worked from home, according to the Office for National Statistics (ONS). While working from home has its advantages, additional costs – like increasing heating and electricity bills – are inevitable.
The good news is that workers are able to reclaim money for working from home in the form of tax breaks paid by HMRC. Here’s everything you need to know about cost recovery …
Can I apply for tax breaks for working from home?
If your employer requires you to work from home due to the coronavirus pandemic, you can claim back money through tax breaks if you’ve increased costs.
In addition, you can make claims through HMRC if:
- You are only asking for expenses for working from home.
- You do not pay taxes through self-assessment.
- Your employer is not yet paying your additional costs.
Even if you only had to work from home for one day since the beginning of the last tax year on April 6, 2020, you can apply for tax relief for the entire 2020/21 tax year.
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What tax breaks can I claim from home?
The amount you can claim is worth up to £ 125 a year depending on the tax rate you pay. This is because you are eligible to apply to HMRC for a tax break of £ 6 per week. In practice this means:
- Basic 20% tax rate taxpayers You can make £ 1.20 (20% of £ 6) a week when you apply for tax break. This equates to a profit of £ 60 per year.
- Higher taxpayers with 40% tax rate You can make £ 2.40 a week (40% of £ 6) when you apply for tax break. This equates to a profit of £ 125 per year.
How do I apply for tax breaks for working from home?
Applying for tax breaks for working from home can be done through the government website. “We want everyone to get the money they are entitled to. That is why we have made the online service as simple as possible. It only takes a few minutes to make a claim,” explains Karl Khan, Interim Director General of Customer Service at HMRC.
To make a claim, you will need a Government Gateway user ID and password. If you’ve never registered for it before, you’ll need to do so before you can make a claim. You can create a Government Gateway user ID through the HMRC Services website and will need your national insurance number and current payroll, P60, or a valid passport.
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Can I apply for tax relief for the tax year 2021/22?
With work from home becoming the norm for many, you may be thinking ahead to the 2021/22 tax year.
There is still no application for this, as the new tax year does not start until April 6, 2021. So look out for a new application form when that date arrives.
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