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You can now make a £250 tax relief claim for working from home – are you eligible?

You can make the claim from HMRC even if you’ve only worked from home for one day

You can now make a £250 tax relief claim for working from home – are you eligible?

If you’re working from home – even if it’s not full-time – you can now make a tax relief claim of up to £125 for the new 2021-22 tax year. 

If you also worked from home during 2020-21, you can still claim for that too, meaning you can gain up to £250 in total for both tax years.

While lockdown measures are beginning to ease across the UK, many employees are still working from home and are seeing increased household outgoings as a result.

The government made it easier to claim in January, by opening a microsite for eligible workers to claim online.

Here, Which? explains how to claim the tax rebate and how to get further financial help to power your home while you’re working.

How can you claim tax relief for working from home?

First, you’ll need to check whether or not you’re eligible to receive tax relief for working from home. To claim, you must:

  • Only be claiming for expenses for working from home (other expenses must be claimed differently)
  • Not pay tax by self-assessment (as you’ll have to claim via your next tax return)
  • Not have already had your expenses paid by your employer
  • Have started working from home due to the coronavirus pandemic
  • Have encountered higher costs due to working from home.

If all of these apply to you, then you can head to the government’s microsite, where its eligibility tool will check all of the facts. You’ll need a Government Gateway user ID and password to proceed, but if you don’t already have one you’ll be guided to the right place to make one.

Once you’re logged in, you’ll need to state what date you started working from home. You’ll receive a rebate for the full tax year, even if you don’t know what date you’ll be going back to the office – and even if you’ve only worked from home for one day.

If your claim is successful, your PAYE tax code will be changed, so you’ll be able to take home more of your income before tax.

How much will you get?

The tax relief you’ll receive depends on your income tax band.

All taxpayers can get a flat-rate of tax relief on £6 a week; basic-rate taxpayers will gain £1.20 a week (20% of £6), which equates to £60 a year.

Higher-rate taxpayers can gain £2.40 a week, which is 40% of £6. This equates to £125 a year.

The government’s microsite allows you to tick boxes for the current and previous tax year, meaning it’s possible to get £120 or £250 if you didn’t claim last year.

If you did claim last year, you’ll still have to make another claim for 2021-22.
The Which? Money Podcast

What if the flat-rate rebate doesn’t cover your outgoings?

If the standard tax rebate doesn’t cover enough of the extra things you’ve had to pay for to work from home, it’s possible to make a claim for more, but you’ll have to provide evidence of your increased outgoings.

What you can claim also differs depending on whether you’re employed or self-employed.

If you’re employed

Employed workers can only claim tax relief on expenses that are solely used for work purposes.

This can include things such as extra energy costs to power your work area, or the cost of business calls that have been added to your phone bill.

However, you can’t claim for things that are used for both private and business use, such as rent or broadband.

If you’re self-employed

Self-employed workers can claim for more costs when working from home, such as a proportion of the costs when lighting, heating, cleaning, insurance, mortgage interest, water rates and general maintenance are used for work.

To work out the proportion, you’ll need to account for the amount of time you’re using your home for work, and in some cases the size of the area within the home that’s used for work purposes. For example, if you work in a study you’d only be able to claim for the costs of heating that room while you work.

If you work from home for more than 25 hours a week, you might be able to use HMRC’s simplified expenses system.

You can only claim expenses via a self-assessment tax return, which you have to submit to declare your earnings each year anyway.

Expenses incurred from working from home can be deducted from your profits, which will reduce your overall tax bill.

Can you get help to heat your home?

While winter may officially be behind us, recent temperatures mean it’s still not quite time to turn off the heating. However, being home all day can mean bigger heating bills.

If you need extra help to pay, there are a number of government grants you could be eligible for, such as:

  • Affordable Warmth and Nest These schemes are for those who receive certain benefits and either privately rent or own their own property. Payments can help with the cost of loft and cavity wall insulation or a new boiler.
  • Cold Weather Payment These payments are made to households that receive certain benefits and help pay for extra heating costs during very cold weather.
  • Winter Fuel Payment This is automatically paid to those who receive the state pension – it’s an annual tax-free lump sum to help pay for gas or electricity during the winter, but what you get depends on how old you are.
  • Fuel Direct For those who receive certain benefits and are struggling to keep up with energy payments, Fuel Direct payments can be taken directly from those benefits payments in order to pay off any outstanding bills.

You can find out more in our guide to the Cold Weather Payment, Winter Fuel Payment and Fuel Direct.

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