Millions of us have been working from home due to the COVID-19 pandemic. If you’ve been working remotely, your household bills might have increased over the past few months – and you may even have had to invest in a new broadband connection to support your work. The good news is that you may be able to claim tax relief to help cover the extra cost.
The Government’s working from home allowance scheme began in October 2021 and has already had an impressive uptake: in the first six weeks alone, more than one million people applied to HMRC. In this WKM guide, we explain who is eligible for the new tax relief, the amount you could claim, and how to claim it.
Who is eligible for the working from home allowance scheme?
The new expenses allowance is available to anyone who has had to work from home as a result of the pandemic since the 6th of April 2020. You don’t need to have been working remotely throughout the entire period from this date – if you were only at home for some of the time before returning to your place of work, you are still eligible to claim.
To check your eligibility, use the HMRC tool.
How much you can claim
Even if you haven’t incurred any extra expenses, you are eligible to claim up to £6 of working tax relief per week. The amount of allowance you receive is based on your tax band:
- If you pay the basic 20% tax rate, you’ll receive £1.20 of tax relief per week (20% of £6);
- Those on the higher tax rate of 40% get £2.40 per week (40% of £6);
- If you earn over £150,000 and pay the 45% rate, you’ll receive £2.70 in tax relief per week.
You won’t have to provide any bills or paperwork for this.
Claiming on an expenses basis
Alternatively, if you have had additional costs as a result of working from home, then you can claim for the exact amount of your expenses instead. These expenses include heating and water bills, home insurance, business calls, and new broadband connections.
Should you choose to claim on expenses rather than based on your tax rate, you’ll need to work out how much more you spent per week than usual. HMRC will give you this exact amount in tax relief – just remember to keep your receipts because these will be required when you claim.
You’ll be able to claim up to £124 for your working from home expenses in this way.
How to claim working from home tax relief
There are two ways you can claim the working from home allowance:
- You can claim on your annual tax return if you are required to file one (take a look at our guide to filing a self-assessment tax return for more information).
- Alternatively, you can claim by filling out a P87 form. This form is available online via gov.uk or on paper (to submit your application online, simply complete the eligibility check and follow the instructions from there).
If you are working from home for the foreseeable future, you may be able to get your tax code changed so you can start seeing the savings on a regular basis. However, if you are only working from home for a short period of time it would be best to wait until you return to work to see how much you can claim.
Hopefully, this blog has provided you with all of the information you needed on the working from home tax relief. If you’re unsure about anything to do with the allowance or your self-assessment tax return, don’t hesitate to get in touch.