Working from home? Make sure you claim everything you can

Hundreds of thousands of Britons are self-isolating after being pinged by the NHS Covid-19 app. One silver lining is that those who are working from home (WFH) could be in line to claim up to £140 of tax relief.

Employees have always been allowed to claim back a tax rebate for costs such as higher heating and telephone bills if they are required by their employer to work from home. Claiming used to be a slightly fiddly process that required a P87 form. But stop-start lockdowns have forced the government to simplify the procedure to forestall administrative headaches.

Last October, HMRC launched a specialised microservice that enables taxpayers to claim relief in minutes without submitting evidence of higher bills. It can be accessed via www.gov.uk/tax-relief-for-employees/working-at-home. You will need a government gateway ID to use the service. The portal updates your PAYE tax code so that your employer deducts less tax from your salary each month.

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The relief you can claim on without providing evidence of your extra costs is £6 a week. A few companies have already paid it as a tax-free allowance to employees to cover WFH expenses, but as times are hard most have opted not to. If the latter applies to you then you can claim relief on the extra costs you have incurred. Standard-rate taxpayers are eligible for a rebate of £1.20 per week (20% of £6), making £62.40 per year. For higher-rate payers the annual relief is worth £124.80 per year, while additional-rate payers get £140.40. Over two years that means it is possible to receive as much as £280 in relief.

For the 2020-2021 and 2021-2022 tax years it is possible to claim relief for the whole year even if you did not work from home every week. Those who work from home for part of the week are also eligible.

You must have been required to work from home; you are not eligible if you chose to do so. You must also declare that your costs have increased as a result (they almost certainly will have owing to higher energy and water consumption). This is an individual benefit, so couples and flatmates can each make a claim provided they meet the criteria.

Remember to claim again

If you do self-assessment then you are still eligible for the full-year rebate, but cannot claim via the portal: instead you must make the claim when you next fill in your return. Self-employed people are not affected as they already claim for work-related expenses when they do self-assessment. It is possible to backdate a claim by up to four years if you haven’t already made one (note that the weekly flat rate before April 6 2020 was £4). HMRC has already received more than three million claims for the 2020/2021 tax year. If you have already claimed for last year, remember to do so again for the current tax year (which began on 6 April) if you qualify.

Data from the Office for National Statistics shows that 38% of working adults were working from home at least part of the time in late April 2021, but only about 800,000 people have so far claimed for the current year.

If you have incurred significantly more than £6 a week in extra costs it is worth claiming for those too, but you will have to go through the more burdensome process of filling in a P87 form and providing receipts to prove it. Note that if you are an employee then only variable costs are counted; you cannot include a contribution towards rent or mortgage payments.