Purple Lime discuss the cost of working from home and what you can claim for.
Working from home has slowly become more popular as technology has become more accessible, but the majority of businesses still have office space that they like their workers to use. However, Covid-19 forced many of us to stay at home, making home-working essential. Now we’ve become used to meeting via Zoom and collaborating on documents remotely, many businesses are now considering reducing or even closing their office space in the long-term, not just while we’re getting through the pandemic.
There are obvious cost savings for businesses – less to spend on premises, furniture and running costs – but it may mean an increase in costs for staff. Home workers have to pay for their own electricity, extra heating and possibly even office equipment. Fortunately, the Working From Home Allowance means that employees can claim back some of those costs.
The Working From Home Allowance
The Working From Home Allowance is a form of tax relief to help cover the costs, whether you work full or part time, as long as you work from home regularly. The government has put together some guidance to set out some of the costs you can claim relief for. It includes:
- Business calls
- Home contents insurance
- Metered electricity bills
- Metered water bills
- New broadband connections
- Office equipment including laptops, chairs or phones used for business
You can’t claim for things you would have had to pay for anyway, such as rent or council tax, or if you’ve chosen to work from home (although the coronavirus pandemic has altered the guidelines a little).
Claiming the Working From Home Allowance
You can make your claim in your self-assessment tax return, or, alternatively, some employers have chosen to deal with this themselves.
Generally, there are two different ways to claim the allowance. You can choose either:
- Tax relief based on the exact amount you’ve spent above the weekly amount, for which you need to provide evidence, such as receipts or bills.
- Tax relief of £6 a week from April 6th 2020 (if you’re claiming for the previous tax year, the rate was £4 a week).
The formula to work out the exact amount you will receive is a little complex – you will get tax relief based on the tax rate you pay. So, if you’re in the 20% basic rate for tax and claim tax relief at £6 a week, you’ll receive £1.20 a week in tax relief. At this point, it would be worth talking to a business accountant. They’ll be able to help you through the process and help you decide which form of relief is best for you to claim. You may even decide it’s better for them to complete your tax return for you, as they’ll be aware of anything else you may be able to claim for in your particular situation.
The Impact of Covid-19
While Covid-19 has changed the way people live across the world, one of the big changes in the UK is the number of people now working from home. It’s estimated that around 60% of UK workers are working from home, with over a third of those planning to continue this once all restrictions are lifted. This is a huge shift for our workplace culture and will mean many more people are eligible to claim the Working From Home Allowance.
If you’ve switched to working from home as a result of the pandemic, there are some extra things you may be able to claim relief on as long as there hasn’t been significant private use:
- Electricity and heating
- Loans provided by your employer
- Laptops, tablets, computers and other office supplies
- Mobile phones and SIM cards
- Temporary accommodation
- Vehicle use
If you are eligible for the Coronavirus Job Retention Scheme, you can’t claim this relief. But don’t despair! An experienced business accountant will be able to advise you as to what you can claim, and how to claim it using your PAYE Settlement Agreement.
Obviously this is a new situation for all of us, and guidance is being added to and updated all the time. The Working From Home Allowance offers a bit of extra support for those who have been forced to work from home, but with circumstances changing all the time, it’s best to check the latest information. At Purple Lime, we can support business owners whose employees have been working from home to help both them and their employees find out what they are eligible to claim for and if there is any long-term support available. To find out more, get in touch with the team today on 01249 691360 or email us at firstname.lastname@example.org