Workers forced to work from home while they self-isolate after getting ‘pinged’ by the NHS Test and Trace app can claim up to £125 tax relief for 2021-22.
Rising Covid-19 cases meant more than 600,000 people were contacted by the app between 8 and 14 July, meaning thousands of people may be having to work from home during their self-isolation period.
Recent figures from HMRC revealed that more than 550,000 workers have already made their claim since the new tax year began on 6 April 2021 – but many more could be eligible as you can claim even if you have to work from home for just a day.
The tax relief is paid at a flat rate, and the government has made the claims process even easier after it opened a microsite in January, where eligible workers can quickly make a 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.
- Find out more: understand your tax code
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 and 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.
Further to this, HMRC says it will accept backdated claims for up to four years – as the working from home order was first brought in towards the end of the 2019-20 tax year, you will also be able to claim for that, too.
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.
- Find out more: tax-deductible expenses
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.
- Find out more: self-employed tax allowable expenses
This story was originally published on 13 April 2021. It was last updated on 23 July 2021, with information on people being able to claim tax relief if they have to work from home during self-isolation.