Working from home during coronavirus has had all sorts of benefits, including not needing to commute, but many of us have found that it can be expensive, with our energy costs going up and some of us having to buy equipment to work from home. Find out which expenses qualify for a tax relief and what you need to do to apply.
Get more personal finance advice at our hub page.
What expenses are eligible for tax relief?
Working From Home Show
Don't miss the UK's first virtual Working From Home Show, which will take place on July 30 & 31. Whether you're a business owner or employee, you'll be able to join interactive seminars, watch product demonstrations and visit exhibitors with products that will make working from home that little bit easier.
Register your interest now
The important thing to understand about claiming tax relief is that HMRC have a very strict definition of what qualifies as an allowable expense. If you're claiming for an item, then that item must have been bought 'wholly, exclusively and necessarily in the performance of your duties’, without your employer being able to reimburse you.
So, if your job requires to work from a laptop, but your employer won't provide you with one, you can claim tax relief on the laptop used only for work duties. If you want an additional laptop/screen/keyboard for your convenience, you won't be able to claim, although you may be able to negotiate at least a partial reimbursement with your employer (at their discretion).
In the same way, if your job requires you to wear specialist clothing such as a uniform, and you have to buy it yourself, you can claim tax relief on such clothing. You can't, however, claim on regular clothing you wear to work, even if you wear a detachable badge with it.
Finally, you can claim relief on household expenses that have gone up due to working from home. Note that in order for you to be eligible, your working from home arrangement must be made official – that is, the time you work from home must be either written into your contract or otherwise mandated by your employer. Because of coronavirus, you would have been officially asked to stay at home by your employer, so you can be reimbursed for the additional energy costs incurred. This doesn't include council tax or water bills as you would have had to pay them anyway and being at home doesn't affect the rate.
How much can I claim?
On one-off purchases such as substantial equipment or clothing, you can claim back the full cost, or a pre-agreed flat rate. You should check the Gov.uk website for further information.
For energy/broadband costs, you can get up to £6 a week or £26 a month. You can also try and work out the exact costs you're incurring by working from home, but the flat rate is probably the easiest to go by, as you won't get any more than that.
How to apply for tax relief?
There are different ways to claim, including online, by phone, or by post. You will need you Government Gateway user ID in order to claim online. You will be directed to what's known as form P87, which is used for tax relief claims for up to £2,500. Note that you can't claim for large purchases such as a laptop using this form and will need to contact HMRC first.
Also bear in mind that if you employer has already offered you a lump sum to contribute towards the costs of working from home, you can't claim again, as they have already claimed on your behalf.