How To Claim The Working From Home Tax Relief

With the rise of remote work, many employees have found themselves working from home more frequently. This shift has seen an increase in the number of tax relief claims for expenses incurred while working from home. If you're eligible, claiming this relief can help offset some of the costs associated with your home office. Here's a guide on how to claim the working from home tax relief.

Understanding the Working From Home Tax Relief

Working from home tax relief is designed to help employees/directors and the self-employed who incur costs as a result of working from home. These costs can include increased utility bills, internet expenses, and possibly a portion of mortgage interest or rent. It's important to note that the rules for the self-employed differ significantly from the rules that apply to employees/directors.

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Types of Expenses You Can Claim

Working from home tax relief covers a range of expenses, including:

Utility Bills: A portion of your electricity, gas, and water bills may be claimable if they have increased due to your work-from-home arrangement.
Internet and Phone Costs: Costs related to internet access and phone usage can be claimed if they are used for work purposes.
Office Equipment and Supplies: Items like a desk, computer equipment, chair, printer, or stationery that are required to perform your duties may qualify for relief.
Rent and Repairs: Self-employed individuals may claim a proportional part of their rent or mortgage interest, as well as costs for repairs and maintenance to the dedicated workspace.

Not everyone will be able to claim all the expenses referred to above. The expenses that you can claim and the calculation method will be driven by your employment status and/or the reason you are working from home.

How to Calculate Your Claim

There are two main methods to calculate your claim for working from home tax relief:

Fixed Rate Method: The simplest way to claim is by using the flat rate method. HMRC currently allows employees to claim a flat rate of up to £26 per week where over 101 hours of homeworking are undertaken in a month. The fixed rate is reduced when an employee spends less than 101 hours a month working from home. The fixed-rate method does not require you to keep detailed records of your expenses, but you should keep a log of hours worked from home each month. The fixed rate is intended to cover household running costs. It may also be possible to claim additional tax relief for other expenses such as telephone, internet, council tax and mortgage interest.
Actual Costs Method: If your additional costs exceed the flat rate, you can claim the actual costs incurred. To do this, you'll need to keep detailed records and receipts of all your expenses. This method requires more effort but can result in a higher claim if your costs are significant.

How to Make a Claim

To claim the working from home tax relief, follow these steps:

Check Your Eligibility: Ensure you meet the eligibility criteria mentioned above.
Choose Your Calculation Method: Decide whether to use the flat rate method or the actual costs method.
Gather Documentation: If using the actual costs method, gather all necessary documentation, including receipts and bills.
Submit Your Claim: You can submit your claim through the HMRC online portal or by completing a P87 form. Alternatively, you can make a claim in your Self Assessment tax return.

Important Considerations

Time Frame: You can claim for the current tax year and up to four previous tax years. Ensure you submit your claim within the allowable time frame.
Employer Reimbursements: If your employer has reimbursed you for any expenses, you cannot claim tax relief on those amounts as well.
Record Keeping: Keep detailed records of your expenses and any correspondence with your employer or HMRC. This will help in case of any queries.
Capital Gains Tax: Any gain arising from the sale of your home may be exempt from Capital Gains Tax. However, where part of the home is used exclusively for business, a portion of the gain may not qualify for Private Residence Relief. You should understand the longer-term tax implications before making a working from home claim.

Conclusion

Claiming the working from home tax relief can provide significant financial relief for employees/directors, or the self-employed who incur costs due to remote work. By understanding the eligibility criteria, types of expenses you can claim, and the methods for calculating and submitting your claim, you can ensure you receive the relief you're entitled to. Remember to keep detailed records and submit your claim within the allowable time frame to maximise your benefits.

You can always contact us if you require any advice or support with your working from home tax relief claim.