Tax relief tips for working from home
07th December 2023
In the wake of the Covid-19 pandemic, working from home has proven to be not just a viable option, but a preferable one for many. While Zoom calls in your pyjamas are undoubtedly a perk, there's more to the story. Many remote workers are leaving money on the table by overlooking valuable tax relief opportunities. So, let's dive into the world of tax rules and discover how you can maximise your savings while working from home.
The benefits of working from home
Sure, the absence of a daily commute is a win, but the financial advantages go beyond saving on petrol, or a noisy journey on the bus or train. Here's the lowdown:
- No more commuting costs: Your commute now involves a stroll to your home office, and the savings are significant. For example, if you live in Zone 4 of the Transport for London map and previously commuted to Zone 1 daily, you’ll save upwards of £2,000 a year!
- Claim a percentage of household bills: The heating keeping you warm during work hours? That internet connection powering your virtual meetings? Claim a slice of these household bills.
- Reduce taxable income: Documenting your deductible home office expenses isn't just paperwork — it's a solid strategy to lower your taxable income.
- Receive cash back from HMRC: Successfully claiming tax relief means potential cash back from HMRC. It's like a bonus for turning your home into a workplace.
Understanding HMRC tax relief
HMRC provides guidelines so remote workers can claim relief on work-related expenses. Here are the key requirements:
The key factor is that your job must require you to work from home. If your employer simply offers flexibility to work remotely but does not mandate it, you typically cannot claim tax relief. For example, if your office is open but you choose to keep working from home, the expenses would not be eligible. There may be exceptions if the office lacks sufficient facilities or capacity to accommodate all employees. But in general, the HMRC requirement is that remote work is obligatory, not optional.
Additionally, you must work from home all or part of the standard workweek on an ongoing basis. Working remotely for a week due to special circumstances would not reach the threshold for tax relief claims. It must be a regular remote working arrangement for all or part of your normal working hours.
How to claim for working from home tax relief
The process for claiming tax relief for working from home is pretty simple. There's a special page on the gov.uk website to get you started. Once you've checked that you can make a claim, you'll need to log into your account with your Government Gateway ID. If you don't already have one of these, you'll have to set one up before claiming. You can do that easily with a valid passport, payslip or P60 form. Once you're logged in, just follow the prompts on-screen to claim your tax relief.
Again, though, you only need to do this if you're not claiming a tax refund for any other work expenses. If you've got essential costs like travel or tools to claim for, talk to RIFT about getting your refund rolling with the UK's top tax experts.
Tying expenses to work
The key things to consider is that claimed expenses related directly to work tasks and activities. Any costs tied to personal activities don't count. So, it's important to break down bills like heating and internet into work and personal percentages, based on time and specific usage allocation. Expenses purely for personal consumption are not valid for tax relief claims.
You have two main options to claim tax relief for working from home:
- Claim a flat rate of £6 per week without needing to show records or documentation. This is simplest, but could mean less cash back.
- Thoroughly track and submit expenses with accompanying receipts and bills. This maximises your claim based on real costs, but requires strict record keeping.
Tips to maximise tax relief
As we mentioned previously, if your working from home expenses amount to no more than £6 a week, it’s easy to submit a claim without the need to provide receipts. However, in many cases, those expenses are very likely to exceed that threshold. Follow these tips to maximise the tax relief you receive:
- Track costs for heating, internet, electricity, etc. Break down the split between work-related and personal percentages.
- Keep receipts/bills for office supplies and equipment.
- Calculate total expenses and submit claims via HMRC’s online portal.
- Consult an accountant or speak to RIFT if you’re unsure about claiming more than the £6 weekly amount.
Top tax relief tip from Ryan Carman, head of operations at RIFT Refunds
HMRC will challenge WFH expenses much more now, so it’s important you’re confident that you qualify. Also, buying lots of brand-new equipment and furniture would not be something that could be claimed as a PAYE employee, even if you have the receipts.
Working from home is financially rewarding once you understand the tax relief opportunities. With RIFT's expertise guiding your claims, you can maximise savings and receive cash back owed from past years too.
Our team makes tax relief easy and stress-free. We handle everything for you and provide personalised advice tailored to your situation. Ready to get the home office tax refunds you deserve while avoiding hassle? Get in touch with RIFT and start your claim for free!
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