Changes to the Working from Home Allowance for Employees

Changes to the Working from Home Allowance for Employees

Introduction:

The landscape of working from home tax relief has seen significant transformations, primarily influenced by the unprecedented impact of the pandemic on work arrangements. Initially, numerous employees qualified for tax rebates during the peak of the pandemic. However, the rules governing eligibility have since reverted, leading to more stringent criteria for claimants.

Working from Home Tax Relief for Employees:

As of 6th April 2022, employees can claim tax relief if their employer has not already reimbursed their expenses, and they incur additional household costs due to working from home. However, to be eligible for tax relief, employees must not have chosen to work from home voluntarily and, one of the following must also apply:

- There are no suitable facilities available at the employer's premises for the employee to perform their job.

- The nature of the job requires the employee to travel an unreasonable distance to and from the employer's premises daily.

- The government mandates working from home under certain restrictions.

Simplified Expenses for Self-Employed:

For self-employed individuals who work from home, claiming the home office allowance involves choosing between two options. The first option is using the flat-rate method, which calculates the allowance based on the number of working hours, resulting in monthly rates ranging from £10 to £26. The flat-rate method offers the advantage of not requiring receipt-keeping. However, it necessitates working at least 25 hours per week from home and separate claims for phone and internet expenses.

Alternatively, self-employed individuals can claim a portion of actual bills incurred, encompassing expenses like heating, electricity, rent, and more, based on the percentage of room usage. This method relieves the need to determine the proportion of personal and business use for home expenses, simplifying the calculation process.

Conclusion:

Understanding the revised rules surrounding working from home tax relief is crucial for employees aiming to claim the home office allowance. The eligibility criteria now demand specific circumstances, and the process varies for the self-employed. Careful evaluation of the available options is essential to make an informed decision on the most suitable method for claiming the home office allowance.

For further information on tax relief for working from home or help with filing your 2022/23 tax return, please feel free to contact Ian Saha or Martin Quinton on 01206 549303.