HMRC has seen a rise in working from home tax relief claims due to COVID-19. Are you eligible to claim and how do you do it?
With Coronavirus forcing more people to work from home across the country than ever before, the HMRC has seen a huge surge in the number of people seeking tax relief.
The UK workforce has had to adapt to lockdown regulations, with workplaces closing temporarily. Those who can have had to absorb the financial responsibility of working from home, meaning everything from needing to set up a home office to seeing electricity bills increase.
Through HMRC, employees can seek working from home tax relief to help cover some of the additional costs that the change brings. Filling in a ‘P87’ form enables you to claim back some of the cash spent in order to allow you to fulfil certain duties.
As a result of so many people starting to work from home in March, HMRC has reportedly been inundated with applications as workers look for ways to mitigate the costs slightly. Although the amount you can claim back in tax is fairly low, it can help if you’ve had to pay out in order to do your job at home.
What can you claim for?
When claiming for working from tax relief, you are able to include the costs associated with items that are “wholly, exclusively and necessary” to do your job successfully from home. This can include your desk, office chair, stationery, printer ink and paper.
You’re not able to claim for increased electricity usage or other costs that are associated with your household, as these are not exclusive requirements to being able to do your job.
How much can I claim?
There are two ways that you can claim for working from home expenses.
The first is to ask your employer for an allowance that can be paid directly to you tax-free. This amounts to £6 per week at a basic level, with more being possible but requiring special arrangements. While this would be a good route to follow in normal circumstances, do to COVID-19, many companies are struggling so are unlikely to be able to accommodate the extra expense.
Your second option is to make a working from home tax relief claim through the HMRC. This means you can ask for extra costs that are necessary to allow you to work from home - such as buying furniture for your home office - to be deducted from your taxable income. For those on a 20% tax rate, a standard claim (the £6 a week allowance) is equivalent to £1.20 a week in tax relief (around £62 per year), while those on the higher 40% rate of tax can claim for £2.40 a week (around £124 a year).
If you think that your costs have been higher than £6 a week, you are able to claim for more. However, this is a longer process and will be required to provide evidence for the higher cost.
How do you claim for working from home tax relief?
Those who usually fill in a self-assessment form will be required to claim for this tax relief on there. Anyone else can fill in a P87 form, which can be submitted online or by post. If you are completing the form online, you will be required to access or set up a Government Gateway account.
The P87 form will ask for your job title, as well as your company’s name and PAYE reference, which will be on your payslip or P60. If you’re filling in the postal form, you’ll also need to provide your national insurance number.
The section of the form you’ll need to fill in is the ‘using your home as an office’ section. If you aren’t eligible for tax relief from other work expenses, such as uniform, simply leave these sections blank.
You’ll need to fill in two boxes on the online form:
- Amount paid by you: If you have incurred increased costs as a result of working from home, simply put the total amount that is equivalent to £6 per week for the period that you have been working from home. According to HMRC, you will not be required to show receipts for this amount.
- Amount paid by your employer: If you are not receiving any tax-free payments from your employer to cover working from home expenses, simply put £0.
Those claiming via the postal form will need to add the expenses they have accrued while working from home to the ‘Other expenses’ section on the form.
It’s important to note that you can only claim retrospectively for expenses. This means that you are best waiting until you return to the office to claim for your additional working from home costs to ensure you are applying for tax relief for the full period.
It is unlikely that you’ll get a tax refund for this period, instead, your tax code will probably be adjusted so you pay less tax across the rest of the financial year.
Ordinarily, you would hear back about your claim within a couple of weeks, but due to the increase in claims, it is likely that it will take HMRC a bit longer to process your tax adjustment.
Should I claim working from home tax relief?
If you have accrued extra costs, you have every right to claim for working from home tax relief in this way. In the instance that your costs are higher than £6 a week, you should also weigh up whether the extra steps are worth increasing your claim.
While it may only grant you a small amount of tax relief, if you are able to fill in the form easily and quickly, it could well be worth it.