Claiming expenses when working from home

Working from home

The tax year of 2020/2021 was a strange one. Aside from the debate around returning to the office, it’s now apparent that employees (and the self-employed) should have suitable working spaces in their homes. Did you know that tax relief is available, should you be working from home?

Are you eligible?

If you are carrying out the duties of your employment under home working arrangements, then you are likely eligible. This means that you are regularly performing some or all of your duties at home. If you spend at least 2 days a week at home (and the remaining days in the office) this pattern would be considered eligible by HMRC. Due to COVID-19 lockdowns, HMRC will accept that employees working from home because their employer’s offices have closed or because they are following advice to self-isolate meet the requirements for home working arrangements. Therefore, a tax-free allowance for home working items is allowable. To add to that, employees can also expense anything they require to set up their home office, if above the allowance.

How much will you get?

The tax relief you’ll receive depends on your income tax band. All taxpayers can get a flat rate of tax relief of £6 a week. This equates to £312 deducted from taxable income. Basic rate taxpayers will gain £60 a year. Higher rate taxpayers can gain £125 a year. If you are self-employed, you can claim for more costs when working from home, including heating, cleaning, insurance, mortgage interest, lighting, and general maintenance. Working out the proportion, involves calculating the amount of time spent working at home, and the area of the house that is used for work. For example, if you work in a specific room you’d only be able to claim for the costs of heating that room while you work. This can be deducted from a Self Assessment tax return, which you have to submit to declare your earnings each year anyway. Expenses incurred when working from home can be deducted from your profits, which will reduce your overall tax bill. Taxd can help with this.

Can this be backdated?

HMRC will accept backdated claims for up to four years. If you have already made claims for previous tax years, you will have to make a new claim for 2021/2022. If you backdate your claim, you will receive a lump sum payment. Filing your Self Assessment through Taxd will ensure you make the most out of any working from home expenses you incurred in the last tax year!