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Home office equipment reimbursements to be exempt from tax

Companies will be exempt from tax on any reimbursements they provide for office equipment purchased during the Covid-19 lockdown to allow employees to work from home.

With the coronavirus lockdown forcing many companies to switch to remote working, there has been an influx in equipment expenses. A large number of organisations have had to invest in equipment that enables employees to perform their duties while at home, including everything from laptops to desks and computer chairs. 

To help those companies affected, the Treasury minister has announced that reimbursements for this equipment will be exempt from tax and national insurance contributions.

Home office equipment

A year-long exemption is being put in place that will cover all home office reimbursement expenses from March 16th 2020 to April 5th 2021. It will cover all equipment that was necessary for employees to complete normal aspects of their jobs while at home, such as office furniture, internet access and computer equipment. 

According to a written statement from Jesse Norman, the Financial Secretary to the Treasury, all equipment being reimbursed must have been purchased with the “sole purpose of enabling the employee to work from home as a result of coronavirus” in order to be eligible. It also states that it must be the case that the provision of this equipment would have been tax-exempt if it had been provided to an employee directly. 

Normally, employers would have to account for the tax and national insurance contributions on this type of reimbursed expenses using a PAYE settlement agreement. However, the exemption, which is effective from the date that the government first suggested working from home, means that HMRC will not collect any tax due on these reimbursement payments. 

According to the statement, the exemption was announced outside of the normal process to ensure that employers and employees are better able to manage the arrangements needed for continued working from home. This could help ease some of the pressures being felt by both companies and employees who are having to spend on setting up home offices, especially as remote working is still being recommended by the government. 

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