Do your tax homework – don’t miss out on tax relief

If you’re working from home due to Covid-19, claim tax relief on the extra costs, says Paul Lewis

Elderly web surfer with laptop and mobile phone stay home to avoid contagion by COVID-19 coronavirus. Two smiling senior people sharing and looking at laptop - old people with modern technology

Millions of people are now working from home most or all of the time. If your employer decides you must work from home, then you can get tax relief on the extra costs. The situation may well continue for many months, even after employers begin a phased return to the workplace. Firms may decide some people should work at home in the long-term – perhaps to enable social distancing at work or just to save costs. If you prefer to work from home, ask your employer to write to you to say it has decided you will.

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Good employers will reimburse people for any extra costs they have – or provide them free with equipment or supplies they need. Employers can also make tax-free payments to cover additional costs, such as electricity or business calls. If they give you a flat-rate allowance of up to £6 a week (£26 a month), it is tax-free and you do not have to keep records.

Alternatively, you can note down all the extra costs for calls, or heating and lighting a room you work from, and claim that. Services you already have, such as broadband, or the rent or mortgage you pay, cannot be claimed.

If your employer will not reimburse you, then you can claim tax relief on any items you buy that are wholly and exclusively needed for you to work from home. For example, a good office chair, keyboard, mouse and monitor to make working on a laptop possible, rather than crouching on a kitchen chair over a small screen. Printer ink paper or new software could all be counted as valid expenses of working from home. The maximum that can be claimed for in a single tax year is £2,500. If you pay tax at 20%, that will save you £500 – or £1,000 if you pay higher rate tax (£475 to £1,025 in Scotland).

If your employer will pay, it’s always better to get them to do that. But if they will not, then you can at least claim some tax relief on the items you buy yourself.

More information Go to gov.uk, search “tax relief job expenses” – you’ll need form P87.

Paul Lewis presents Money Box on R4

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