Working from home tax relief: £62.40 or more tax saving

Since the pandemic, more and more people are required to work from home. This blog post sets out some thoughts on the tax relief which many employees will be able to claim.

In a nutshell

For the current tax year, i.e. from 6th April 2020 to 5th April 2021, employees who are required to work from home are allowed to claim £6 per week as a flat-rate claim, without supporting evidence of expenses actually incurred.

Even "a day" working at home is sufficient to claim £6 per week for the "whole year"

I have long known of the weekly Working from home rate: £4 per week until the pandemic struck. I had not given it any attention, though: for most people, a claim of £4, worth 80p for a basic rate taxpayer, is not worth claiming.

And so I initially thought when the government raised the limit to £6 for this tax year alone (we’ll have to see if it is extended). Until my attention was drawn to Martin Lewis’s blog which stated – I still think fairly amazingly- that if a person is required to work at home even for a single day or week, nevertheless he or she can claim the £6 for the whole year. That changed everything, spiking my interest.

£62.40 for a basic rate taxpayer, £140 for a 45% taxpayer, £187.20 for a 60% taxpayer

The claim it for the whole year ‘concession’ means the tax relief is more significant. For basic rate taxpayers, it is worth £62.40; and for 40% or 45% taxpayers even more, and, for instance, for those people in the c £100k-£120k 60% band (the band where £1 of personal allowance is lost for every £2 of income) the saving is £187.20.

To good to be true?

Yes, it is, and personally, I don’t think it fits with the wording of the legislation. But I can’t fault Martin Lewis’s diligence in checking and double checking with HMRC, including warning HMRC that he planned to “go viral”. And later I saw this issued by one of tax profession’s professional bodies. And at my suggestion, Clive Gawthorpe of UHY Hacker Young checked with HMRC and published this note. I’m now satisfied that it is appropriate to claim, and am reading it that HMRC are going beyond the strict legislation under the remit given by their care and management powers: in short, it is probably de minimis, and HMRC possibly view it as being more practical to make things easy for all, rather than risk having to police individual claims. Anyway, it is good news.

For further reading, this link to HMRC’s website contains useful information, and I am sure a Google search would result in many hits; and I would also add that this note might be superseded by changes in HMRC policy or further announcements.

How to claim- people who receive tax returns

For those people who submit a tax return, it may be easiest simply to wait until it is 2020/21 tax return season, and making a claim on the return.

I am not actually sure [I will update when I am] but I suspect simply entering £312 in box 18 of the employment pages will be sufficient.

For the majority of people who don't submit tax returns

Navigate to HMRC’s Working from home site, or use this link.

Answer a few easy yes/no questions, reaching:

Have your National Insurance, payslip, P60 or passport to hand, and create a government gateway account, and then log in on the button. I hope this link works, but if not start with the main ‘are you eligible’ page.

I’m told that if you can apply for a credit card online, or fill in an online form, then you can apply for Working from home relief: HMRC’s system makes it easy. You should then find your PAYE coding is amended.

Other points: complexities

This note doesn’t cater for people with multiple employments, or any case other than people employed throughout the year. Consider Rodney, for instance, who retired from employment before Christmas: can he claim £6 * 52, or he is limited to about 9/12 of the relief? I think it would be unfair for Rodney to put 6*52 in box 18 if he files a tax return, but don’t know what HMRC’s systems will do if he uses their online claim service: I suspect the claim will similarly be curtailed when he gets his final payslip.

Other points: 2018/19

For 2018/19, the £4 per week can only be claimed for actual weeks which include days at home: that will be some people, including people like my wife, a school teacher: any such people who submit tax returns may therefore want to make a box 18 claim.

A takeaway, lost in the pot, or a lifesaver? Charity donation?

Is £62.40 a lot of money? Well, it depends: there will be many taxpayers for whom it is a very welcome boost to their finances, and I hope this blog reaches many, many, such people.

At another extreme, there are many for whom it will just pay for a takeaway, or not noticed, just absorbed into a healthy bank balance. There are some people who would regard it as too small to bother about -for instance, some owners of substantial businesses might decide they haven’t been “required” to work at home, but have done so through choice. I myself have worked from home for six years, and don’t believe it is fair for me to claim, not being “required” because of coronavirus: I won’t be claiming. But my wife, a primary school teacher, has been required at several times since March, and she will claim: but she will then donate all the benefit to charity. Neither of us feel it is right to claim for a full year when she has been in school part of the year; and even for the many weeks she has been working from home, there are people who we would rather give this extra tax relief to rather than keep it ourselves.

I have set up charity donations pages and would encourage anyone for whom the £62 or £140 or whatever sum they receive is a “nice to have” to consider giving either a part, or the whole, to it: because some people are more fortunate than others.

For anyone who would like to donate, the links are:

Allan Beardsworth is fundraising for The Trussell Trust (justgiving.com) (food banks)

Allan Beardsworth is fundraising for Samaritans (justgiving.com) (helping people who are struggling to cope)

Update: one teacher has responded to this blog by donating her tax relief to her school’s breakfast club. That is just as welcome as my two suggested charities: there are so many deserving causes.

And finally

I can’t foresee cases where it is disadvantageous to make a claim, and as I say, Martin Lewis has been diligent in his efforts and others have endorsed it, but this blog is written in the hope it helps others, and readers may wish to take their own professional advice.

Also, I would welcome comments/corrections/updates/experiences.

This note is considered to be correct as at January 2021 when prepared.