What tax deduction can employees claim for working from home?

In view of the rising energy prices, are there any additional reliefs for anyone WFH?

by Sayyora Magliulo

My client was concerned about rising costs of electricity and wanted to know whether there were any additional reliefs available for working from home due to increasing costs of household expenses.

The rules were temporarily relaxed in 2020/21 and 2021/22 due to coronavirus whereby employees could claim a deduction of £312 from their earnings if they had to work from home due to pandemic at least one day during the tax year.

The rules from 2022

From 6 April 2022, the rules tightened and in order to be eligible, employees must be obliged to work from home by their employer, ie deduction is not available where employees choose to work from home or are on flexible arrangement.

Currently there are two ways in which tax relief for homeworking can be claimed:

• Flat Rate Expenses – up to £6 per week; and
• Relief for Actual Expenses.

Flat Rate Expenses

Employees can claim up to £6 per week as a deduction from employment income if not reimbursed by employer.

Relief for Actual Expenses

Alternatively, a claim for the incremental costs of working from home can be made. These costs include:

• Gas and Electricity,
• Additional insurance costs,
• Metered water,
• Additional costs for business calls.

The additional costs are calculated by working out the cost of allowable expenses according to the number of rooms in the property and the amount of time spent working in them.

No claim can be made for fixed costs such as Council Tax, rent and mortgage costs.

Costs of broadband and telephone bills can only be claimed if contracts are in the employer’s name unless bills can demonstrate specific business amounts.

Next steps

If you would like to discuss expenses for working from home, your self assessment, or are an employer looking to develop a more resilient employee expense policy for the future please talk to us and we will be delighted to assist you.