It is currently thought that 46.6% of the working population are now working from home and 86% of those are doing so as a direct result of COVID-19.¹
If you are now working from home as a direct result of COVID-19 there are certain expenses you can claim for but be mindful that you cannot claim for them if you chose to work from home. In essence if your place of work is closed or you are self-isolating then a homeworking arrangement will exist for this period and this period only.
HMRC have issued guidance that those employees with a homeworking arrangement in place can claim tax relief for the additional costs of doing so.
What are the allowable costs?
From April 2020 the tax exempt amount increased to £6 per week, you can either claim this direct from HMRC by completing form P87 or your employer can pay this amount to you without deducting tax and National Insurance. If you chose to claim this amount you do not need to keep any records of the additional costs you have incurred.
You can claim more however if you will expected to keep records and to demonstrate how you have calculated the figures.
You can claim actual costs for the following items:
• Cost of the additional gas and electricity for your workspace only, this involves a calculation showing the square footage of your workspace, the number of hours you use it to work from home.
• Business telephone calls using your home telephone or personal mobile telephone, you cannot claim this if your employer provides you with a telephone for business use.
• Any additional insurance costs, if you are insuring your business assets whilst you are working from home and this increases your premium you can claim the difference.
• Metered water, this is difficult to prove as it is likely that not only are you working from home, but maybe your partner is too, and your children would be at home if their school is closed.
You cannot claim for items that are used for both business and private use:
• Mortgage or rent payments.
• Council tax
• Water rates
• Ground rent
Be aware that you cannot claim for broadband use unless it was not installed previously, and you had it installed specifically to work from home. There is some debate around the increased cost if you have had to increase your speed from say dial-up to fibre. I would certainly argue the case if a query was raised by HMRC.
What if you did not have a home office set up?
Many households already have a kitchen table or desk they can work from but what do you do if you do not? Your employer can assets such as a desk, a chair, a printer and there will be no liability to the employee if private use is insignificant.
If the employee provides themselves with a desk or a chair, then they cannot claim tax relief for those items. However, if you provide your own computer for work use you may be able to claim tax relief for the depreciation value.
It is inevitable that you are going to use stationery that you would normally pop to the stationery cupboard in the office for however, when you are working from home there may be an instance that you need to purchase such items. These items can be claimed for and directly reimbursed by your employer, but make sure your homeworking arrangement allows for this and the expenditure needs to be proportionate. No point buy yourself an expensive pen thinking your employer will reimburse you or you can claim tax relief.
There are exceptions where you would need specific tax advice, and this surrounds the purchase of computer and furniture. If your homeworking arrangement states that the employer will provide this equipment it is advantageous for the employer to purchase the items and have them delivered to you.
What about travel expenses?
Pre-COVID-19 most contracts of employment would state your normal place of work is your office and it is likely that it would involve a commute to get there. This travel is not tax deductible and cannot be claimed as a tax relief or as an expense claim to your employer. But what if you are now required to work at home and the office on some days? Does this mean that you can claim? In brief, no.
Your contract will still stand, during COVID-19 and any change to your place of work will be temporary and any travel to your office is classed as ‘ordinary commuting’. If you are required to travel to clients on the days that you are working from home, then you can claim mileage in the usual way and the start of your journey will be your home address.
For more guidance and information, please CONTACT US and we’d be happy to have a chat.
¹ – Source: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/coronavirusandhomeworkingintheuk/april2020