Get tax relief for working at home

By Douglas Shepherd

Employed doctors in private practice, and staff employed by independent practitioners, may be able to benefit from tax relief claims for working from home due to coronavirus during 2021-22. 

Over 550,000 employed workers have already claimed and are benefitting from the tax relief, according to HM Revenue and Customs (HMRC).

If employed workers were told to work at home by their employer because of coronavirus and, as a result, their household costs have increased, they are eligible to claim the ‘working from home’ tax relief. 

HMRC said it was a ‘quick and easy’ procedure to claim via its online portal. It received more than three million claims for the tax relief for the 2020-21 tax year.

Myrtle Lloyd, HMRC’s director general for customer services, said: ‘Half a million people have already reduced their income tax this year by up to £125, by claiming tax relief on their working from home expenses.

‘We want everyone who’s eligible to benefit, so we’ve made it quick and easy to do online. Check if you’re eligible and apply at GOV.UK by searching ‘working from home tax relief.’

From 6 April 2020, the amount employers have been able to pay tax-free without employees having to provide evidence of an increased bill is up to £6 a week. 

Employees who have not received the working from home expenses payment direct from their employer can apply to receive the tax relief from HMRC. 

Eligible customers can claim tax relief based on the rate at which they pay tax. For example, if an employed worker pays the 20% basic rate of tax and claims tax relief on £6 a week, they would receive £1.20 a week in tax relief (20% of £6 a week) towards the cost of their household bills. 

Higher-rate taxpayers would receive £2.40 a week – 40% of £6 a week. Over the course of the year, this could mean customers can reduce the tax they pay by £62.40 or £124.80 respectively.

Check your eligibility

Taxpayers can check if they are eligible via GOV.UK. 

To claim for tax relief for working from home, employees can apply directly via GOV.UK for free. Once their application has been approved, the online portal will adjust their tax code for the 2021-22 tax year. They will receive the tax relief directly through their salary until March 2022. 

If employees were required to work from home last year but did not claim for the tax relief, they have not missed out.

HMRC said it would accept backdated claims for up to four years. They will receive a lump sum payment for any successful backdated claims.

A spokesman added: ‘Using an agent to apply for the working from home tax relief, and other similar schemes, could result in customers paying unnecessary fees or commission. Using the GOV.UK service is quick and free, and customers will receive 100% of the tax relief that is due. Agents will not be able to use the online portal to apply for the relief on a customer’s behalf.’

Since 6 April 2003, employers have been able to make tax-free payments to meet or re-imburse additional household costs to employees who work at home under homeworking arrangements.

Employees do not need to provide evidence to show their bills have increased unless they are applying for tax relief on costs above the £6 per week flat rate; then evidence of the increased costs may be required.

Employees will receive the tax relief that corresponds with the income tax rate that they pay. For example, it will differ in Scotland.

Tax break can be backdated

David Redfern

Tax preparation specialist David Redfern said: ‘Obviously, this past year has seen a widescale change in working patterns and it is refreshing to see HMRC loosen its rules to allow more employees to get help to cover their increased home expenses.’

For the current 2021-22 tax year, employees who work from home can claim a £312 allowance to cover additional costs such as heating, electricity and metered water due to  more time spent at home.

Mr Redfern, of DSR Tax Refunds, added: ‘Employees who may be worried that they have been working from home since last March can take reassurance in the fact that tax refund claims can be backdated for four tax years, so if you have been working from home since the start of the pandemic, it isn’t too late to claim your allowance for the previous tax years covered. 

‘This also includes any essential purchases you may have made at the start of the pandemic in order to kit out a workable home office. However you will only be able to claim for expenses which have not been reimbursed by your employer – tax relief is designed to ensure that you are not left out of pocket.’ 

Self-employed workers are not entitled to claim this tax allowance.