WFH Tax Relief for 2020-21 Tax Year and Beyond

Are we on the verge of returning to ‘normal’? Maybe. The vaccine programme is proving promising, but what if – like many – you’ve been told you now predominantly WFH?

WFH, or working from home, has become the new normal for most office-based workers over the last year. So much so that it has changed the way we work. Company owners, realising that productivity hadn’t been negatively affected, are looking at their running costs and saying ‘do we really need to be paying for this big office and its associated bills?’

Many are now expecting to remain WFH, at least part time, for the 2020-21 tax year as social distancing is still important to help control the virus. This means reducing numbers in buildings and therefore not operating the office at full capacity. Some companies have even sold, or cancelled rental contracts on their offices – and so for these employees WFH is the new normal now and going forward.

Great, so the boss is happy, he’s saving money. What about you?

Whether your work has sprawled across your dining table, or someone at home has lost a bedroom, WFH has an effect on you in terms of finances and taxes.

WFH means:

• Increased electricity use
• Increased heating use
• Increased water usage
• Internet and phone calls from home
• Purchasing your own stationary
• Purchasing other office supplies
• Maybe even purchasing office furniture
• If your work place offered lunches or discounted food rates, you may also be out of pocket for your food during your working day

The Government have announced an up to £125 per person Working From Home Tax Relief, which you may claim for each of the 2020-21 and 2021-22 tax years – up to a total of £250. The total amount you can receive will be based on your tax band. 

The easiest option is to claim the ‘flat rate’ of £6 per week. Basic rate taxpayers can claim up to £60 per year in relief, and higher-rate taxpayers can claim up to £125.

If £6 per week doesn’t cover your expenses, and your employer hasn’t covered these expenses, it is possible to claim for more but you will need the evidence of your expenses in order to process your claim.

You can claim this relief no matter how long you worked from home during the pandemic – even if it was just one day, but your working from home has to be related to the pandemic restrictions.

Check if you can claim online (unless you’re self employed, in which case you can claim in your self assessment tax return), the website will confirm your eligibility before letting you know how you can make your claim. You will claim either £6 per week or you can claim for the specific costs associated with your WFH.

Once your claim has been approved your tax code will be changed and you’ll receive the relief via salary until March 2022, and backdated claims will be received as a lump sum.

Unfortunately your accountants cannot submit your claim for you, each individual must claim for themselves via the online portal here. The good news is that it’s easy to use and shouldn’t take more than a few minutes to complete if you’re happy with the flat rate of £6. It will take a little longer if you are claiming your exact expenses (more than £6 per week).

We would urge everyone to take advantage of this tax relief, so please do follow the link and check your eligibility.