The government might have lifted pandemic restrictions in the UK, but the primary concern that remained was- “can I claim tax relief while working from home?”
There is a tax rebate of £125 every year for anyone who has been working from home since the pandemic. The funds are available for individuals to meet their additional expenses, like electricity bills, subscriptions, or other obligations.
HMRC launched an online portal for individuals to claim tax relief. And according to the source, “roughly 3 million people have already applied for the tax relief.”
It means if you have worked for even a day from home, you can claim tax benefits. However, there is an eligibility criterion for the same.
Eligibility Criteria to Claim Work from Home Tax Relief
For securing tax relief, you need to meet the below eligibility criteria:
- A notice issued by the company to operate from home.
- If you have worked even 2-3 days in a week from home,
- Asked to attend office sometimes for important purposes
- Pay increased costs while working from home.
- He/she should follow a proper work from home arrangement.
- New employees can claim benefits from their employers if working from home.
- The employer has not provided financial help to cover the work-at-home costs.
- Not paid or applied for tax-paying with self-assessment. Because then you would have to apply for a claim on the tax return rather than the tax.
Apart from this, SELF-EMPLOYED INDIVIDUALS CAN NOT CLAIM TAX RELIEF BENEFITS. This is because self-employed people are solely responsible for maintaining their finances and other liabilities, such as very bad credit loans no guarantor no broker. The key is to know that only those who are instructed to work from home themselves can claim tax relief during that time. If you work from home at your will, you cannot claim tax benefits.
If you are someone who missed out on filing the tax relief working from home all the yearlong or was unknown about it, you need not feel disheartened as HMRC will accept tax relief claims backdated to 4 years. Individuals will receive the lump-sum payment. Employees will receive a 100% tax deduction. This includes self-assessment claims.
However, you will need to check with your employer for the same as, according to the law, if the individual is seeking a tax relief in the year 2022, it will require filing an altogether new claim.
How Much Tax Relief Could One Claim?
There are 2 ways in which you can seek a tax relief claim:
Either your employer ensures to cover-up the expenses of work from home setup and pays the same in your wages tax-free
Make a claim yourself
Eligible employees or individuals can claim tax according to their contribution to the tax. According to UK government guidelines, high taxpayers can claim up to £2.40 a week. This amounts to 40% of £6 per week. This amounts to $125 annually. Weekly, employees, receive this amount.
The eligible individual can claim up to £26/month, which used to be £18/month before 6 April 2020.
As a basic rate taxpayer, you save £68 per annum.
However, individuals living in Scotland can claim higher tax relief.
Employees are not required to share the proof or disclose the raising bills. However, it is until they apply for tax relief on the expenditures, costing them more than £6 in a week.
The amount workers could claim as the tax was raised from £4 to £6 during the pandemic, and, supposedly, they no longer have to prove their eligibility to claim the amount. However, the whole proposal was extended for 12 months more- as THE INDEPENDENT quotes.
However, there are no plans to reform the proposal soon.
With this, individuals can effortlessly cover additional expenses while maximizing their tax relief claim. This relief could help them operate from home without an additional liability.
It will be the greatest relief for employers as they no longer need to justify the expenditure and for the employees as well. The employees will no longer need to keep a record of their additional expenses.
What Documents do You Require to Claim for Work from Home Tax Relief?
As mentioned above, self-employed individuals can’t claim this tax relief. And if you are employed and have been instructed to work from home and manage the complete work from home apparatus, you can claim tax relief. Make sure you can claim only for work purposes. Following is the series of documents that you may require filing the claim:
- A government gateway ID
- Proof of the duration when you started working from home
After qualifying this round, you may witness some positive changes
- PAYE tax code (changes automatically)
- You will be charged low tax on earnings/ income
- If you made tax claims last year, it would be added to your income as a lump sum.
What Sort of Expenses Can an Employee Claim as Tax Relief?
HMRC have dictated 5 major criteria for deducting expenses as a sort of tax relief:
- Heating
- Lighting
- Business rates
- Metered water bills
- Home contents insurance
- Business calls
- New broadband connection
The above costs are the only ones you can claim. The following costs cannot be claimed and will not be included in the claim. Examples include:
- Mortgage interest or rent
- Council tax
- Water taxes
- Insurance
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According to HMRC, if an employee utilizes his broadband connection before starting work from home, he cannot claim the deduction or relief. And if an employee doesn’t have one and needs one to do work from home, it would qualify as an additional cost, and thus, one might apply for reimbursement of the same.
The same applies to landline rental as well. Only business calls can be reimbursed by the employer, not the personal ones. Apart from these, an employer can provide the furniture or equipment for hassle-free and seamless operation from home. These would then be tax-free benefits(in-kind).
How To Claim the Tax Relief on Work from Home Expenses?
To claim tax, you can directly apply to the government portal. After approval, the portal will amend your claim for current tax year. Eligible individuals can receive the sum in a lump sum by March 2022. If you have filed for your self-assessment, you can claim to have some relief in returning the tax.
Thus, in this way you can claim the tax relief on the work from home setup from your employer or by filing for the same online at the portal. Even a minor relief can help one manage the household and other expenses well.
And when the government is assisting you, one should leverage the opportunity and provide their best for the growth of the firm. If you miss out on claiming the tax relief, you can claim so, check for validity immediately.
According to ICAEW, once the pandemic is over, the rules will be back once again, where the allowance will be tax-free and will be paid only by employers in the UK.