Tax Reliefs for Working from Home

Given the Governments insistence for those who can work from home should do so, a large number of employed individuals will suddenly be working from home. Workers may be able to claim tax reliefs for the extra household costs associated with working from home. For instance for extra telephone bills, electricity and gas.

HMRC accepts that your employer can pay you up to £4 per week (£18 per month) to cover these additional costs free of tax. No records of the expenses need to be kept. If however, your employer gives you over this limit, then HMRC will usually request proof of the costs incurred.

If your employer refuses to offer these payments then there is an opportunity to claim for personal tax relief. Tax relief in this scenario will be allowed only if you can prove that the expense was ‘wholly, exclusively and necessarily’ for the purposes of their job. In order to meet this criteria HMRC requires that the following conditions are met;

  • the employee performs the substantive duties of their job from home (i.e. the central duties of the job)
  • those duties cannot be performed without the use of appropriate facilities
  • no such facilities are available to the employee on the employer’s premises or are too far away
  • and at no time either before or after the employment contract is drawn up is the employee able to choose between working at the employer’s premises or elsewhere.

This may be very difficult to prove, even for costs which you at first appear to be incurred as a result of working from home, for example extra heating & lighting bills as HMRC could argue that this was not vital to your work. This would also be the case for; child care, food, drink, internet and council tax as HMRC would argue that it does not meet the criteria of exclusively as there is a dual purpose to the transaction. The moral of the story is to opt for tax free payments if possible and not for tax relief.