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Working from home allowance: how to make your claim

You’ve probably spent the past year juggling remote working with home schooling, answering the door to yet another Amazon delivery and doing housework — now you can reward yourself by claiming the working from home allowance.

John
25/05/2021

Many people in the recruitment industry might be new to remote working and are unaware of the opportunity to save money in the 2020/21 tax year and also future tax years. You don’t have to be registered for self-assessment tax returns to qualify, the allowance is available to all.

Read on to discover how to make a claim…

What is the working from home allowance?

The scheme is not new, unlike the Government’s range of Covid-support packages, but the criteria have changed to reflect today’s exceptional circumstances.

In the tax years up to and including 2019/20, the allowance was £4 a week, with most people only able to claim for a couple of weeks. Not surprisingly, most people didn’t bother to file for such a small amount.

The Government made a significant change for 2020/21, increasing the weekly limit to £6 per week with effect from April 6, 2020. It also stated that an individual only has to work from home for one day to claim the whole year’s allowance. This blanket rule by HMRC was designed to minimise the administrative headache of having to deal with multiple changes in circumstances.

In practice, an employee who has been required to work at home at any point in the year can submit a full year’s claim to HMRC amounting to £312 (£6 x 52). The allowance can be paid without the employer having to justify the expenses or the worker having to keep receipts to calculate the true cost. The allowance is also a flat rate, so there is no pro rata for part-time staff.

We expect that the 2020/21 rules will be extended through 2021/22, but watch this space...

Who is eligible?

Company directors doing administrative or finance work do not qualify. It also depends on the type of business, as HMRC will say a café owner does not need to do most of their work at home. Owner managers of recruitment companies, however, will almost certainly qualify.

The main eligibility criteria are:

  • Anyone required to work from home for at least part (one day) of the year due to Covid
  • Additional costs were incurred with working from home (e.g. heating, electricity etc.)
  • Costs have not been repaid by the employer
  • ‘Substantive duties’ have been carried out at home (for more guidance please visit Employment Income Manual - EIM32780)

What about other expenses?

We advise that for the vast majority of claims, the standard rate of £6 per week will be the most appropriate option. Other home expenses such as mortgage interest, rent, broadband and council tax are fixed costs which are unaffected by working from home.

For more guidance, please visit Employment Income Manual - EIM36730

What if my employer has already paid me a working from home allowance?

Recruitment companies may have already given their staff a homeworking allowance in the form of a tax-free payment through their normal payroll. In these cases, the employees cannot make an additional claim for the working from home allowance.  

I have changed job, can I still claim?

To be honest, this is still a grey area as HMRC has only published limited guidance to date. The spirit of the legislation is to compensate workers for any additional costs incurred by working from home, so it would make sense to claim for the entire year, regardless of whether your employment has changed.

What if I have several employers or directorships?

If someone has two part-time roles with different employers, which both require an element of working from home, then you are able to claim an allowance for each.

With regards to company directors, you need to remember that the rules require substantive duties to be carried out at home to qualify. These situations are rare, so we don’t anticipate many claims of this nature.

How do I claim?

Those who do not submit a self-assessment tax return should simply make a claim to HMRC by post, telephone or via the new P87 micro-service HMRC launched on October 1, 2020. The HMRC online portal is incredibly simple to use and you can make your claim in a few minutes. A link to the online portal can be found here.

For those registered for self-assessment, should be claiming via their tax return. Even if you do not think you have incurred any extra costs, you are still entitled to claim.

Need help?

If you need any help or advice with the working from home allowance, please do get in touch.

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