COVID-19: Home working allowance – [13 October 2020]

COVID-19: Home working allowance – [13 October 2020]

HMRC has confirmed, employees working from home can have a £6 per week or £26 per month allowance paid tax-free by employers or, during the pandemic, can claim a deduction from earnings for this allowance. The £6 per week/£26 per month is available in full, even if an employee splits their time between home and office: ie it does not need to be pro-rated over the number of days spent each week at home and in the office.  Alternatively, employees can claim relief on the actual amounts incurred, subject to being able to provide evidence, such as phone bills

The allowance is to cover tax-deductible additional costs that employees who are required to work from home have incurred, such as heating and lighting the workroom, and business telephone calls.

Employees who are not reimbursed by their employer can claim this allowance as a deduction from their earnings in their tax returns (self assessment return or a postal form P87) or via the government gateway to claim tax relief in-year for 2020/21 through the code number. To find out which route to use, visit HMRC’s new online claims checker.

We understands that this deduction is a COVID-19 easement and after the pandemic the rules will revert back to the previous position under which the allowance is tax-free only where paid by employers.

We understands that if an employee who has told HMRC that they are working from home returns to working in the office, there is no requirement for the employee to tell HMRC.