How to Claim £125 Tax Relief if you are Working from Home
The Covid-19 pandemic has meant that millions of people in the UK have been working from home. If this is something that applies to you, then you may be able to claim tax relief on household related expenses.
You only need to have worked at home for one day in the past tax year to be eligible for this relief. It can be worth up to £125 per year and applying is a very simple process. More information about how to apply can be found below.
Many people did not give much thought to the expenses they would occur from working from home at the beginning of the pandemic. Instead, they more than likely thought about the money they would be saving in fuel costs and buying lunch out of home each day. They may have only believed that they would be working at home for a few months or so.
However, as the pandemic progressed you may have found that you were still working from home during the winter. Increased use of electricity and having the heating on all day could mean that you are facing higher fuel bills than usual. You may also have had an increase in other expenses such as phone bills and water bills.
The tax relief can be claimed if you are working part-time or full-time and if you have spent more than one day working from home in the tax year. However, there are some situations where you are not able to make a claim.
You cannot make a claim if it was your own choice to work from home rather than being instructed to do so by your employer. You will also not be able to claim if your employer is paying you expenses or an allowance to meet some of the costs of working from home.
It is estimated that over 50,000 claims for tax relief were made between October 2020 and June 2021.
How Much Can You Claim?
There are two ways that you can claim tax relief for working at home.
The easiest way is to make a set claim of £6 per week. This means that you do not have to keep a breakdown of the hours you have worked and the expenses that you have incurred. The rate of £6 can be claimed for tax years from 6 April 2020 onwards.
The other way of claiming is to make a specific claim for the exact amount of expenses that you have incurred. You will need receipts and other documentation to prove that you have incurred the expenses you are claiming for.
You will get tax relief on the rate that you usually pay tax. If you pay tax at the lower rate of 20%, then you will get 20% of the £6 back in tax relief. This works out at £1.20 per week or £62.40 per year. Your tax code will change so that you do not pay tax on the amount you are claiming relief for. This means you will receive more money in your wages.
You can backdate your claim for four tax years if you have been working at home across all of these years, even if it was just for a day. You will receive any backdated money that you are owed as a lump sum.
How To Apply
You can check whether you are eligible for tax relief by answering some simple questions on the HMRC online portal. This should not take more than a few minutes.
In order to make a claim you will need a Government Gateway account, and this can be set up easily on line.
You may see advertisements from companies that offer to make the claim on your behalf. There is absolutely no need to use one of these companies as you will end up having to pay them a fee.
Applying for tax relief is a very simple process and it only takes a few minutes of your time. If you do need any help, then there are guides on the portal that you can use. When you make the claim yourself, you will keep all of the money that you are owed.
Even if you are now working back in the office, you can still make a claim if you have been working from home during this tax year. If your claim is successful, then your tax code will be adjusted and the relief will be paid through your salary.