Working from home, also known as remote work or e-working, means performing at least some of your job obligations from the comfort of your home, whether full-time or part-time. Following the global epidemic, millions of individuals began working from home. However, the restrictions governing tax deductions for the additional cost of living that results from working from home have changed. Employees may be eligible for tax advantages if they pay for certain business expenses themselves rather than having their company reimburse them. This clause does not apply to the costs incurred directly while fulfilling your obligations. This article explains the benefits, requirements, and application process for work-at-home tax relief.
The government established tax relief for those who work from home in 2003 to offset the higher costs of doing so. This used to be equivalent to a tax-free weekly payout of £4. However, the government increased the amount to £6 per week, which forced millions more people to work from home. Furthermore, the rules were temporarily loosened, so proof of regular remote employment was no longer required. Instead, it meant that you could claim up to £140 even if you only worked from home once a year. Following the repeal of all COVID-related financial measures, millions of workers have returned to the labor force, either full- or part-time. HMRC has changed its recommendations for the upcoming fiscal years 2022–23, resulting in stiffer eligibility restrictions for tax benefits.
Criteria for eligibility
The eligibility rules have changed significantly from 2020–2021 to 2021–2022 tax years. During these tax years, people who met the following qualifications were eligible for work-from-home tax incentives:
Claiming these tax years was only possible if and only if the following conditions were met:
- Their employer required them to complete their tasks at home.
- Working from home increased their family’s costs.
- They did not get any money back from their employer for the extra costs they had to pay while working from home.
Because the working-from-home allowance was backdated, it could be claimed for the 2020–21 and 2021–22 tax years. However, the eligibility conditions have changed for the fiscal year 2022–2023. The new laws state that if you “choose to work from home,” you will not be entitled to tax breaks. This includes situations where your contract allows you to work from home, COVID forces you to, or your employer’s office is complete.
According to HMRC, certain people will still be entitled to lodge a claim, such as if your profession requires you to reside a long distance away from your workplace. This may also apply if your organization has a physical location. Working from home does not qualify you for a tax advantage if you are self-employed. Furthermore, HMRC says only work-related expenses, such as transportation to and from the office and utilities used during the business, are allowable deductions. However, you can deduct part of these expenses on your tax return.
Even if they have not yet made a claim, taxpayers who submit an appropriately backdated claim to HMRC will receive a “lump sum payment,” according to the agency. In addition, the deadline for filing claims for the 2020–21 tax year has been pushed back to April 5, 2025, while the 2021–22 tax year deadline has been pushed back to April 5, 2026.
Application Procedures
Through a dedicated HMRC website, you can claim tax benefits relating to working from homeor alternatively you can make your working from home tax claim via Money Back Helpdesk. The portal will initially ask questions to assess whether you are eligible for the remote worker stipend. Furthermore, the eligibility conditions for different tax years are abundantly clear. Then, to submit your reimbursement request, you will need your Government Gateway login information. It will only take a few minutes if you still need to create one.
Specify the first day you can conduct business from home after signing in. It would be 2020 if the first shutdown began in 2020. Working from home will be tax deductible for the entire fiscal year 2020–21, not just the first four months. This is because the new fiscal year begins on April 6, yet the shutdown started on March 23. You can file a claim for the 2021–22 tax year while you file a claim for the 2022–23 tax year.
To access the online application for tax relief for remote workers, go to www.gov.uk/tax-relief-for-employees/working-at-home. Self-assessment taxpayers are not eligible for the work-from-home tax credit offered through the site. Instead, you must apply with your tax return.
Disclosure: This is a featured post.