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How to claim back the expense of working from home

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03/04/2020
With millions of people forced to work at home due to coronavirus, you may be able to claim up to £6 a week for the additional expense of heating and electricity as a result.

With the UK on lockdown, those who are able to work from home are encouraged to do so.

But with stay-at-home Brits expected to spend an extra £200 a year on utility bills, this may be a big cost to swallow at a time of wage cuts and job insecurity.

However, you may be able to claim up to £6 a week to help cover the expense of working from home via a little-known income tax relief offered by the government: P87.

Before we go into the detail, it’s important to think about whether you need to claim. Businesses are under pressure and the HMRC call centre will be stretched dealing with priority cases.

While employees and the self-employed are struggling during these unprecedented times, the flip side is that they’re saving by not spending on the usual activities and travel as the UK is in lockdown.

Kay Ingram, chartered financial planner at advisers, LEBC Group, said: “One benefit of working from home is that other spending on travel, lunches and impulse buys, drinks after work, will all reduce, so for those still working and being paid, now is a good time to build up your rainy day funds from the savings being made.”

How to claim back job expenses

Employees who are required to work from home have always been able to claim tax relief or expenses incurred as part of their employment so this isn’t something new introduced due to the coronavirus crisis.

From 6 April, you may be able to claim up to £6 a week (up from £4 a week in the 2019/20 tax year) to cover your employment expenses.

This can include extra heating costs, electricity costs and the cost of making calls on your personal mobile phone.

There are three ways to do this:

  • Through your employer as a non-taxable benefit. This can be done via your usual expense claim which means cash will usually be paid straight to your bank account and without tax being deducted.
  • Through HMRC and the usual self-assessment. Here you can claim tax relief on the up to £6 a week cost. Martin Lewis, founder of MoneySavingExpert this week confirmed with HMRC that it will consider claims from employees working at home due to coronavirus measures if their usual workplace is closed. He says this can be worth £1.20 a week at 20% tax or £2.40 a week at higher rate. For those who normally do a self-assessment form, you can claim on it.
  • For others, you’ll need fill out the online P87 form through your Government Gateway account or by filling out a postal P87 form. See Lewis’ blog for more details on what questions you’ll be asked and what information you will need to supply.

Important points to note

Employers do not have to pay these work from home expenses. Ingram said: “It will depend what the contract and staff handbook say on this and whether the employer wants to pay it if there is no explicit reference in there. At the moment some employers may have no money to pay it with if they are closed down completely. For some, reimbursement via the tax system may be the only choice.”

You won’t need to keep any records or receipts unless you have a larger employment expense.

You can’t claim for things that you use for both private and business use, for example, rent or broadband access.

You can’t apply for this if you’ve been furloughed as this is on the condition that you can’t work.

You also can’t apply for this if you voluntarily work from home.

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