In the last year millions of us have been told to work from home for a period of time – whether a few weeks or months on end.
But many of you haven’t claimed tax relief that you are due as a result.
The benefit is offered to workers told by their employer to work from home – provided they have not received home expenses payments directly from their company.
What’s more, HMRC has just announced that you can claim it for the whole of this year and backdate for 2020/21 too – even if you only worked a single day from the comfort of your kitchen.
What is it?
There are rules about what extra costs you can and can't claim the working from home tax relief for.
The allowance is designed to cover costs heating, metered water bills, home contents insurance, business calls or a new broadband connection.
They do not include costs that would stay the same whether you were working at home or in an office, such as mortgage interest, rent or council tax.
There are two options.
For the current tax year, you can claim £6 a week without having to show or provide any evidence of the extra costs you've incurred by working from home. For most people, this is likely to be the most straightforward option.
The amount of tax relief you get depends on what income tax band you are in.
If you pay the 20 per cent basic rate of tax and claim tax relief on £6 a week you would get £1.20 per week in tax relief, which is 20 per cent of £6.
A higher, or 40 per cent, rate taxpayer can get £2.40 worth of tax relief a week if they claim for the £6 a week worth of extra costs incurred by working from home.
For the entire tax year, the total work from home tax relief would be around £62 for basic rate taxpayers, or around £124 a year for higher rate taxpayers, assuming the £6 a week option is selected.
Alternatively, you can choose to claim for the exact sum of extra costs you incur working from home each week, if this is more than £6 a week.
To do this you'll need evidence such as receipts, bills or contracts.
You may also be able to claim tax relief on equipment you’ve bought, such as a laptop, chair or mobile phone.
How do I apply?
Business owners can advise their staff to submit their own claims.
Last October, HMRC launched an online portal offering employees a hassle-free way to claim the relief without the need to provide receipts or to make complicated calculations.
Many people failed to apply – perhaps because they were unaware of the scheme or maybe because the sum is so small.
But as the months have gone on - and let's face it, few of us expected to still be in this situation more than a year on - it may be worth adding to the pennies.
And what’s more, it’s not too late to sign up.
The tax relief scheme is being extended for the entirety of the 2021/22 tax year and anyone eligible to claim the work from home for tax relief last year can also still do so.
This means eligible taxpayers can now apply for the work from home tax relief for both the 2020/21 and current tax year.
The Government is still advising people to work from home if possible, meaning millions of people are likely to be eligible.
The application process is pretty quick and straightforward but you'll need a 'Government Gateway' user ID and password to claim. You can create a user ID if you do not already have one.
If successful, the claim will alter your tax code and you should start seeing your pay packet rise slightly as the tax relief kicks in.
If you need any help – or advice on any other tax relief options – give us a call.