Given the current coronavirus outbreak more of us are working from home that ever before. A question we are asked increasingly is can an employee claim any expenses for working from home?
There are two situations to
consider here:
- Your employer is willing to reimburse expenses you have incurred
- Your employer does not reimburse expenses
- Your employer is willing to reimburse expenses you have incurred
HMRC have published guidance for employers on the types of expense they can reimburse tax free to employees who are home-working due to COVID-19. These include:
- Mobile phone
- Cost of a new
broadband connection for business use (it does not cover the costs of an
existing broadband connection that the employee already pays for)
- Laptops, tablets,
computers, and office supplies – mainly used for business purposes
- Additional expenses
like electricity and heating – payment or reimbursement for the
additional household expenses incurred when an employee is working from home of
up to £4 a week (£6 a week from 6 April 2020) is non-taxable. If the
employer agrees, a claim for more than this amount can be made if receipts are
submitted and kept.
- Other direct office
expenses such as paper, printer ink (a reasonable proportion to reflect
business use), postage etc
If your employer reimburses you for office equipment such as a new desk and chair this is taxable but the employer can pay the tax and NIC for you under a PAYE settlement agreement.
2. Your employer does not reimburse expenses
We have not yet seen any specific advice on this in
relation to home-working due to COVID-19 so at present we have to assume the
normal rules apply. The normal rule is that you can claim a tax deduction
for certain unreimbursed additional expenses incurred if you are REQUIRED to
work from home. One would assume that HMRC will accept the coronavirus situation
as one where you were ‘required’ to work from home although this has not yet
been confirmed. Assuming HMRC do accept a tax deduction is allowed the
following expenses can be claimed:
- Additional expenses like electricity and heating – a tax deduction for the flat rate of £4 a week (£6 a week from 6 April 2020) can be claimed. Alternatively you can claim based upon a proportion of your actual household running costs, if you keep records of them all and the extent to which you use your home for work. Expenses which would be incurred whether you work at home or not, such as mortgage, council tax, water rates, are excluded from this deduction.
- Cost of a new broadband connection for business use – you can claim for this provided you do not already have broad band at home. You could also claim for the additional cost of having to upgrade your broadband connection to support increased usage. This would be covered under the flat rate (£4 or £6 per week) unless you are making a claim for higher actual costs.
- Telephone costs – the incremental costs of business calls would be tax deductible but a proportion of the line rental for a single home phone connection is not allowed. If a second line is required and used for work purposes only this would be allowed.
- Mobile phone – the costs relating to dedicated business mobile phone would be tax deductible. Alternatively the incremental costs of business calls on a personal mobile phone would be tax deductible if they are not covered by a free minutes allowance in the mobile tariff.
- Other direct office expenses such as paper, printer ink (a reasonable proportion to reflect business use), postage etc can be claimed.
You would claim a deduction for the allowable unreimbursed costs on the employment pages of your self-assessment tax return. If you wish to do this you should keep records of the costs incurred, and/or the flat rate amount you wish to claim.
