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With huge numbers of office workers now working at home due to the coronavirus, many people may not be aware that they can claim expenses for costs they may incur.

According to the UK’s Office for National Statistics, in April 2020, nearly half (49.2%) of employed adults were working at home, many for the first time.

If your office is currently closed and your employer is requiring you to work from home, then you may be able to claim for increased costs. Because this may involve various things, such as extra heating and lighting costs, electricity usage and telephone calls, there is a set rate of £6 a week from 6 April 2020.

There are two ways this may be claimed:

  • Employers can pay you £6 a week tax free
  • If your employer doesn’t pay this you can claim tax relief on £6 a week. This is £1.20 a week for basic rate taxpayers, or £2.40 a week for higher rate taxpayers

It may be possible to claim more than £6 a week, however, you must keep records and be able to show how the higher figure has been calculated.

Other expenses

HMRC have set out guidance as to what expenses employers can pay employees while they are working at home due to the coronavirus.

Under normal rules, employers reimbursing employees for buying office equipment would be taxable and result in the employee receiving a tax bill. However, on 13 May the government announced that between 16 March 2020 – 5 April 2021 there will be a temporary tax exemption and NIC disregard where the employer reimburses an employee for the costs of home office equipment.

Telephone calls

If you’re provided with a mobile phone by your employer then this will not be taxable. If you are using your own telephone, mobile or landline, then you can claim tax relief for the cost of business calls but not any rental element.

Broadband and office equipment

If you already pay for broadband at home, then you cannot claim any additional expenses. If you do not have broadband but you now need it to work from home, then the broadband fee can be reimbursed by your employer and is non-taxable. Any private use must be limited. These rules also apply for any office equipment.

Claiming tax relief

If your employer does not reimburse all allowable costs, then you can still claim tax relief for the allowable expenses. If you are a basic rate taxpayer, you can claim 20p for every £1 of allowable expenses incurred but not reimbursed. For higher rate taxpayers this is 40p for every £1.

You can claim this on your annual self-assessment return. If you are not registered for self-assessment, you can use the P87 form for expenses of up to £2,500. For claims over £2,500 you will have to register for self-assessment. You must remember to retain receipts and calculations as evidence to support the claims made.

For help and advice on employee expenses during the coronavirus, contact Ann Bibby on abibby@ellacotts.co.uk or 01295 250401.