Helping you prosper

How to claim the working from home allowance

Remote working has become the new normal for many business owners and employees, and while it has its advantages, there are also hidden costs. For example, our heating bills increased over the winter as we stayed at home, while electricity usage shot up as laptops and phones needed charging.

What about the money workers saved by not commuting to work? Well, rail commuters still had to pay for their season tickets and car loan or lease payments are fixed and don’t reflect how many miles you drive.  

If you work locally, your commuting costs would be negligible so working from home probably increased your monthly overheads. In practice, this probably meant the lowest paid suffered the most by remote working.

The Government is sensitive to these issues and has made changes to the working from home allowance, helping workers to claim more money. 

Up to the 2019/20 tax year, the allowance was only £4 a week, with average claims only allowed for a couple of weeks. From 6 April 2020 you can now claim £6 per week for the whole 2020/21 tax year which amounts to £312 (£6 x 52).

The best bit is HMRC will allow you to claim for the whole year, even if you only worked from home for one day. There is no need for employers or workers to provide proof of expenses, and it is a flat rate, so there is no pro rata for part-time staff.

Before you get too excited, there are a few provisos…

Company directors taking home some admin work do not qualify. HMRC will also check your line of business, for example: car mechanics will not be doing a large part of their work from home.

The working from home allowance applies if the statements below apply to you:

  • You were required to work from home for at least part (one day) of the year
  • You incurred additional costs by working from home (e.g. heating, electricity etc)
  • Your costs have not been repaid by your employer
  • ‘Substantive duties’ have been carried out at home (more guidance can be found here). 

It doesn’t matter if you have changed jobs during the year, or have more than one part-time job, you should be eligible to claim.

Before employees make a claim, they must check that their employer has not paid them the tax-free allowance through their normal payroll. 

The way you claim the working from home allowance will depend upon if you submit a self-assessment tax return. If you do, then simply make a claim on your 2020/21 tax return. Everyone else needs to make a claim to HMRC by post, telephone or via the new P87 micro-service HMRC launched on 1 October 2020. A link to the HMRC micro-service portal can be found here

The next step

If you require further help with the working from home allowance, please contact John Sheehan or your usual UHY adviser.

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