Millions miss out on work from home tax relief: How to claim
At the height of the pandemic and amid the national lockdowns, anyone who could was asked to work from home to curb the spread of the virus.
While employees required to work from home have always been able to claim tax relief or expenses incurred as part of their employment, the tax relief was highlighted to these workers for the first time, helping to offset the extra cost of heating and electricity.
According to data obtained by investment platform, Interactive Investor, 1.8 million taxpayers claimed the relief in 2021/22, worth up to £125.
However, of the estimated 32 million people in employment back then, working from home peaked at 38% – affecting some 12 million employees. But this figure includes people on furlough (3.5 million) and self-employed (4.1 million) at that time, as well as employees and other workers who were ineligible for the relief.
And given that HMRC is still accepting claims for the full year’s expenses for the 2020/21 and 2021/22 tax years for eligible employees, millions may be able to receive up to £250 (£280 for top rate 45% taxpayers).
Myron Jobson, senior personal finance analyst at Interactive Investor, said: “The once novel idea of working from home became the norm for millions of people during the pandemic.
“Almost 1.8 million workers took advantage of the tax relief in the 2021/22 tax year – which is likely to be a fraction of the number of workers eligible for the relief.
“It is not too late to claim for previous tax years. If your employer has asked you to work from home at any point since 2020 you could be eligible for between £62 and £125 in tax relief per tax year. That means those who haven’t claimed for the two previous tax years can get up £250 in tax relief, a sum not to be sniffed at amid the rising cost of living.”
How the working from tax relief works and how to claim
If you have been asked by your employer to work from home, even just for one day, you can still claim for the whole tax year. If you work from home by choice, you won’t be able to make a claim.
Since April 2020, the maximum amount employers have been able to pay tax-free without employees having to provide evidence of an increased bill was set at £6 a week.
Employees who have not received the working from home expenses payment direct from their employer can apply to receive the tax relief from HMRC.
How much eligible taxpayers receive depends on the rate of income tax they pay:
Basic rate taxpayer: If an employed worker pays the 20% basic rate of tax and claims tax relief on £6 a week, they will receive £1.20 a week in tax relief (20% of £6 a week) towards the cost of their household bills. This equates to £62.40 per tax year.
Higher rate taxpayers: If an employed worker pays the higher rate of 40% tax, they will receive £2.40 a week (40% of £6 a week). This equates to £124.80 per tax year.
Top rate taxpayers: If an employed worker pays the higher rate of 45% tax, they will receive £2.70 a week (45% of £6 a week). This equates to £140.40 per tax year.
Taxpayers have until 5 April 2025 to make claims for the 2020/21 tax year and until 5 April 2026 to make claims for 2021/22.
Once the application is approved, the relief is paid through the worker’s salary through a change in the worker’s tax code.