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Have your employees claimed their tax relief for working from home?

Employers have been able to pay employees up to £6 a week tax-free to cover additional costs if they have had to work from home since April 2020 and HMRC has received more than 54,800 claims through a new portal.



Launched on 1 October 2020, the online portal has been set up to process tax relief on additional expenses for employed workers who have been told to work from home by their employer to help stop the spread of coronavirus (COVID-19).



Employees who have not received the working from home expenses payment direct from their employer can apply to receive the tax relief from HMRC - which is encouraging those claiming tax relief for working from home to apply directly through GOV.UK.



Eligible taxpayers can claim tax relief based on the rate at which they pay tax. For example, if an employed worker pays the 20% basic rate of tax and claims tax relief on £6 a week, they would receive £1.20 a week in tax relief (20% of £6 a week) towards the cost of their household bills.



Higher rate taxpayers would therefore receive £2.40 a week (40% of £6 a week). Over the course of the year, this could mean taxpayers can reduce the tax they pay by £62.40 or £124.80 respectively.



HMRC’s Interim Director General of Customer Services, Karl Khan, said: “We want everyone to get the money that they are entitled to, so we’ve made the online service as easy to use as we can – it takes just a few minutes to make a claim. Once the application has been approved, the online portal will adjust an individual’s tax code for the 2020 to 2021 tax year. The employee will receive the tax relief directly through their salary and will continue to receive the adjustment until March 2021.”



HMRC is also reminding employed workers, for example healthcare workers and care home staff, that they can also claim tax relief on work-related expenses, including cleaning their work uniforms. Employees who clean, replace or repair uniform or tools, or pay fees and subscriptions for their work can apply online directly to HMRC and see instantly if they are eligible for tax relief on work expenses.



In 2018 to 2019, more than 500,000 customers (66% of total expense claims) applied for the tax relief using an agent rather than directly from HMRC and will have had to pay fees or commission. But those who are paid through Pay As You Earn (PAYE) can claim directly to HMRC and keep all of the money which they are entitled to.



Employees do not need to provide evidence to show their bills have increased unless they are applying for tax relief on costs above the £6 per week flat rate, in which case evidence of the increased costs may be required. Employees may be able to claim tax relief on the cost of:


  • - Expenses for working from home
  • - Repairing or replacing small tools needed to do their job (for example, scissors or an electric drill)
  • - Cleaning, repairing or replacing specialist clothing (for example, a branded uniform or safety boots)
  • - Business mileage (not commuting)
  • - Travel and overnight expenses
  • - Professional fees and subscriptions



Employees could alternatively receive the tax relief as a lump sum payment if they wait and apply once the 2020 to 2021 tax year has ended.



Photo courtesy of Canva.com

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