From 6 April 2020, employers have been able to pay employees up to £6 a week tax-free to cover additional costs if they have had to work from home.
Staff who have not received the working from home expenses payment direct from their employer can apply to receive the tax relief from HMRC. Applicants won’t have to provide evidence of extra costs incurred to claim the tax relief.
How does the tax relief work?
Eligible taxpayers can claim tax relief based on the rate at which they pay tax. For example, if an employed worker pays the 20 per cent basic rate of tax and claims tax relief on £6 a week, they would receive £1.20 a week in tax relief – or 20 per cent of £6 a week – towards the cost of their household bills.
Higher rate taxpayers would therefore receive £2.40 a week – 40 per cent of £6 a week. Over the course of the year, this could mean taxpayers can reduce the tax they pay by £62.40 or £124.80 respectively.
Once the application has been approved, your tax code for the 2020/21 tax year will be adjusted. The tax relief will be received directly through salaries and employees will continue to receive the adjustment until March 2021.
Staff 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, in which evidence of the increased costs may be required.
According to HMRC, the majority of tax relief claims are for repairing or replacing tools and branded uniforms, professional subscriptions and business mileage. Healthcare workers, people working in the food and retail sector and those in the construction industry are most likely to make a claim.