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Working from home tax rebate: Understanding WFH expenses during the pandemic

If you are a freelancer or business owner juggling the demands of remote work, you might wonder what this means for employees or yourself claiming expenses.

Already, more than one million people have claimed for tax relief on their working from home expenses, saving them up to £140 a year. Here’s a quick guide to understanding how the tax rebate works.

Working from home expenses during the pandemic

If you have moved your team to remote working this year, then as an employer you are able to pay your employees up to an additional £6 a week, tax and NI free. This is intended to cover the costs associated with setting up a home office or providing the necessary utilities and resources to enable them to continue their work while away from the business premises.

Making this additional payment is the easiest way of ensuring staff are not caught short when provisioning themselves. However, if you have not given staff a tax-free allowance or reimbursed expenses yourself, then employees can claim a tax rebate themselves in line with their usual rate of tax (£1.20 per week for 20% taxpayers; £2.40 per week for 40% taxpayers; and £2.70 per week for 45% taxpayers).

What counts as expenses?

Below are the permitted expenses that are eligible for tax relief:

Utilities – A rebate is possible on the additional resources and utilities your staff will use while working from home, including energy, water, broadband, costs of making business calls and even insurance in some instances.

Office equipment – This includes computers/laptops, phones, as well as anything else essential, such as a desk and chair.

Other expenses will also be allowed, which enable staff to perform their job, including:

Work tools and uniforms – Including maintenance/cleaning costs, as well as repair or replacement.

Transport costs – Covering costs of essential travel and vehicle mileage costs, and even overnight accommodation if required.

Membership fees – Any costs for agreed-upon professional memberships and subscriptions paid by the employee will be covered.

Ensure that staff are aware they can only claim if they were requested to work from home, not if they signed up for it voluntarily. Rebate claims above £6 per week will need receipts to prove the expenses were incurred during home working.

How to claim a tax rebate

Whether you are claiming tax relief for yourself or signposting for employees, then simply download or direct staff to the P87 working from home expenses form available from HMRC. There is additional guidance and information available online

For more advice on how to navigate tax rebates on working from expenses, speak to us at CWR Accountants today.