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An Ultimate Guide to Working from Home Tax Relief

Working from home tax relief is an HMRC initiative. If you were instructed by your employer that you should work from home during the pandemic, even for just a day you could be eligible for tax relief in the tax year. This money will be used to cover additional costs like broadband bills and higher heating. Do not worry if you are not ready to claim relief, because HMRC states that the deadline is a couple of years away from now.

Working from Home Tax Relief

What Exactly is Working from Home Tax Relief?

In the wake of the pandemic, people were advised to work at home by their employers the last few years. The cost of commuting has decreased, while other expenses like your internet, gas, and electricity are likely to have risen due to you staying at home more often. To help pay for these extra expenses, HMRC allows you to claim working-from-home tax relief. You can do so using a designated online portal.

Can I Claim for Working from Home Tax Relief?

To qualify for tax relief while working from home, your contract must clearly state that it's required by your job. Employers can also supply an official letter that confirms that you are working from home in the course of your job. You can claim back the last four years of tax relief only. Making claims could alter the tax codes of your previous years so that you have less income tax to pay for the foreseeable future.

How Much Tax Relief will I Get?

There are two ways of getting tax relief:

● Your employer will pay your expenses and add the tax-free wages into your paycheck.

● You are more likely to seek tax relief through HMRC instead of having your employer pay for the expenses.

NOTE: You can't do both. You won't be able to take advantage of working-from-home tax relief if the employer pays your expenses.

If you decide to claim tax relief, the amount you'll receive will depend on the rate of income tax you pay:

● Basic rate taxpayers will receive £1.20 per week or £62.40 per tax year.

● Higher-rate taxpayers will receive £2.40 per week or £125.14 per tax year.

● Top-rate taxpayers will receive £2.70 per each week or £140.78 per tax year.

If you didn't claim for the tax relief for the current tax year or one before, but you did work from home, you are able to retroactively claim. Working-from-home tax relief is an individual benefit, so a couple or a group of flatmates can all claim it if you are all working from home.

What is the Deadline to Apply for WFH Tax Relief?

If you are working from home during 2020/21 or the tax year 2021/22 but did not manage to claim the rebate, you can still do so HMRC states that it has no plans to end the microsite or online portal. Claims can be backdated, meaning that you may be eligible for up to £280 (for top-rate taxpayers) tax relief if you claim for both the last tax year and the one before.

HMRC confirmed that you will have until April 5th, 2025 to claim your tax relief for the 2020/21 tax year. Then, until April 5th, 2026 to claim for the 2021/22 tax year.

Can I Claim for Working from Home Tax Relief

Can I Claim Tax Relief for Working from Home in the Tax Year 2022/23?

Some workers will be able to claim for the current tax year. However, many won't be qualified for the tax year because it's no longer a legal requirement to work from home.

● You are eligible to claim the tax relief if you have extra household costs due to working from home, and your employer hasn't yet paid for these additional expenses.

● To be eligible to claim this tax year that began on April 6th, 2023. any of these conditions must be in effect:

● You aren't able to work at the premises of your employer because they don't have the infrastructure like, for instance, your employer has a small office and has no room to work in the office.

● Your job demands that you be so far away from the premises of your employer that it is absurd for you to drive to work every day. For example, your workplace's premises are located in Newcastle however your job requires that you work in Scotland

● Government restrictions mean you must work from home, even though these restrictions have been lifted and cannot be used in this tax year.

In order to claim tax relief, You cannot have made the decision to work at your home. HMRC has also warned employers who simply inform their employees that they can work from home could not be enough to qualify for tax relief. Therefore, if you're doing hybrid work. It is only possible to be eligible for tax relief if there's a shortage of suitable facilities on the premises of your employer for you to do your job.

Who is Eligible for Tax Relief for the Last Two Tax Years?

Not everyone is eligible to claim for the last two tax years so you need to check first that you:

● Were told to work from home by your employer. You cannot claim tax relief if you chose to work from home

● Have had to pay higher costs related to working from home (but you don't need to show evidence of this)

● Must not be receiving expenses directly from your employer to cover the extra costs of working from home

Do you pay tax by self-assessment? You can still claim the tax rebate but you need to apply for it in your tax return rather than through HMRC's online portal.

If you are still unsure whether you are eligible, there is a government tool that can help you find out.

NOTE: If you are self-employed, you can't claim because you work for yourself. However, you can claim expenses on your tax return.

If you are new to tax returns, check out our guide to self-assessment.

How can I Claim Tax Relief?

To claim the tax on working from home:

● Go to the official Portal and answer the eligibility questions.

● During this process, you may be asked about any other costs related to work that you may claim as well.

● You will require the Government Gateway ID to proceed with your application. If you don't have one you can get one at the time of the process. You'll need

● Your national insurance number.

● A current payslip,

● After you have logged in, enter the date on which you started working at your home.

If you've been employed since the beginning of the lockdown's first phase (23 March 2020) enter that date and you'll get the rebate for two complete fiscal years (6 April 2020 until 5 April 2021 as well as 6 April 2021 until 5 April 2022). It is necessary to use this microservices portal to submit your claim.

Who is Eligible for Tax Relief

What If the Rebate Doesn’t Cover My Extra Needs?

If the amount provided is not enough to cover the additional costs you've incurred, you can request relief on larger amounts.

There are two possibilities:

● If you submit an annual self-assessment form, simply include the claim on that form.

● Complete the P87 form which permits workers to claim back any expenses to a maximum of £2,500.

HMRC states that the additional costs may include things like:

● Heating

● Water bills that are meter-based

● Home contents insurance

● Business calls

● New broadband connection

You'll need:

● Your employer's name as well as the PAYE reference (which you will find on your payslip or P60)

● Your job title

● Receipts (to be able to prove the additional costs)

It is not possible to get back the entire cost of the additional expenses, but you will receive tax relief on the amount. For example, If you've spent £600 for additional expenses as a basic rate taxpayer you'll be able to see your net wages increase by 20 percent.

How Will I Get the Money?

If you're making a claim for the 2022-2023 tax year, HMRC will modify your tax code and you'll be able to claim tax relief from your pay.

Note: You can hire a tax accountant. Your tax accountant can ensure that you are tax-compliant and have not paid too much tax. They can also help you get a tax return quickly and efficiently.



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