Claim tax relief if you’re working from home

If you’re working from home because of lockdown rules, and your household bills are higher as a result, make sure you claim the additional tax relief you’re entitled to.

Since last year, employers have been able to pay their employees up to £6 a week tax-free to help them cover household expenses such as heating and electricity while they work from home. However, lots of companies are currently unable to do this, as the pandemic has left them struggling financially.

If your employer isn’t paying you an additional working from home allowance, you can claim tax relief on £6 a week directly from HMRC for both this tax year and the previous tax year, without having to provide any evidence of the extra costs you’ve had to pay. Bear in mind that you can’t claim this allowance if you choose to work from home – you’ll only be eligible if you’ve had to work from home. Here’s what you need to know.

How much tax relief can I claim?

The amount of tax relief you’ll be able to claim depends on the rate at which you pay tax. For example, basic rate taxpayers, who pay tax at 20% and claim tax relief on £6 a week would receive £1.20 a week in tax relief (20% of £6). Over a year, this would mean they can reduce the amount of tax they pay by £62.40.

Higher rate taxpayers who pay tax at 40% can claim £2.40 a week (40% of £6 a week), or £124.80 over a year, while additional rate taxpayers, who pay the top 45% rate of tax, can claim £2.70 a week in tax relief, equivalent to £140.40 a year. The amount you’ll get if you live in Scotland will differ, as income tax rates aren’t the same as in England and Wales, but tax relief will still correspond with the tax rate you pay.

If you think your additional expenses from working from home are higher than £6 a week, you can claim tax relief on the exact amount they are but you’ll need to supply HMRC with evidence such as receipts, bills or contracts.

Do I have to have worked from home the whole time to claim?

No, due to the pandemic and this year’s exceptional circumstances, even if you’ve only worked from home for a day or more since 6 April 2020 and have had higher expenses as a result, you can claim tax relief for the whole year. If you haven’t yet made a claim, you can claim two years’ relief, for both the 2020/21 tax year and the current 2021/22 tax year.

What if there’s more than one of us working from home?

The allowance applies per person, so if two of you are working from home, you can each claim tax relief separately.

How do I submit an application?

HMRC has introduced an online microservice to make it easier for people who are working from home to claim tax relief.  If you don’t submit an annual tax return, you can use the service here.

If you have an existing ‘Government Gateway’ account, which you use to check your state pension or your tax credits, you can submit your Government Gateway credentials to confirm your identity. If you don’t have a Government Gateway account, you’ll need to create one, which you can do as part of the application process.

The microservice launched on 1 October, and by 13 October HM Revenue & Customs (HMRC) reported that more than 54,800 claims had already been submitted. The service can be used to claim tax relief for both this tax year and the 2020/21 tax year.

Can I still claim this tax relief if I file an annual tax return?

Yes, although not through HMRC’s microservice. Instead, you’ll need to claim the relief through your self-assessment tax return. Again you can apply for the whole year, even if you’ve only worked from home for part of it, and for the previous tax year.

How will I receive the money?

You won’t be sent a cheque or have any money paid into your bank account. Instead, your tax code for the 2021/22 tax year will be adjusted once HMRC has approved your application and you’ll receive the tax relief directly through your salary until March 2022.

Essentially, the relief reduces the amount of tax you pay, so you’ll have a little bit of extra income each month.

Have you managed to successfully apply for tax relief since you’ve been working from home? If so, we’d be interested in hearing how easy or difficult you found it. You can join the conversation on the Community forum or leave a comment below.

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