Possible tax breaks for those working at home

The Government is asking that people work from home where possible, and they should recognise this by providing the appropriate tax relief for such workers, say leading tax and advisory firm, Blick Rothenberg. As the Government aims to cautiously restart the UK’s economy, the Prime Minister, Boris Johnson, has asked that individuals should continue to work from home should where it is possible to do so, but experts believe he needs to look at the extra expenses they are incurring by being there. This may include higher electricity and heating bills, internet and phone costs and new computer equipment. 

With working from home set to continue for many workers for the foreseeable future, the Government and HMRC need to review and broaden the rules.  This could include increasing the tax-free allowance from £26 per month to £50 per month and/or providing for full reimbursement of expenses incurred through a “gross-up” mechanism.” In normal circumstances, there are very few tax breaks for employees working at home.  However, the lockdown measures have meant that many employees have been forced to work from home and people should be aware of the expenses they can claim against their tax:

• An employer can pay an employee a tax-free allowance of £26 per month, (or £6 per week) to meet the increased costs of home working.
• If the employer does not pay the allowance, the employee can still claim this, but the benefit will only be £6.20 per month for a basic rate tax payer i.e. £26 x 20%.
• Employees can claim other expenses, but only where they are specifically needed for business purposes.  So, the cost of extra business calls can be claimed, but the cost of a broadband package cannot be (even if the employer asks you to use the broadband for work).  
• An employer can provide an employee with a mobile phone, without any tax cost for the employee, provided the phone contract is in the employer’s name.