Tax and working from home

The pandemic has meant that far more people are working from home, and for some this may be a permanent arrangement. Here are a couple of useful reliefs.

Home working allowance

Employers can pay employees (including part time employees) £6 per week entirely tax and NIC free to compensate them for any incidental costs of working from home.

If employers do not pay employees anything for working from home, the employee can make a claim for £6 a week against their tax. This will be adjusted through their tax code. More information here: https://www.gov.uk/tax-relief-for-employees/working-at-home.

Tax free equipment

A temporary relief has been introduced by the government to facilitate the provision of equipment to employees to enable them to work from home, which runs from 16 March 2020 to 5 April 2021 (although it could be extended). This means that where an employee buys equipment to use at home, and the employer reimburses the exact cost of the equipment, there is now no benefit charge on the employee. This is true even if the employee gets to keep the equipment.

However, if an employer provides equipment to an employee to allow them to work from home, and subsequently allows them to keep it, then there is a tax charge. It’s better for the employees to buy and get reimbursed!

These reliefs apply where there is no significant private use. What this means, and for further details, see https://www.gov.uk/guidance/check-which-expenses-are-taxable-if-your-employee-works-from-home-due-to-coronavirus-covid-19.

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