Since the pandemic struck, working from home, previously a relatively rare concept, became classed as ‘the new normal.’

Given the shift in working caused by the COVID-19 pandemic, it has meant a higher percentage of the UK workforce now spends at least part of their working week at home.

This in turn has dramatically increased the number of taxpayers claiming against the Home Working Allowance.

Traditionally these reliefs have only be available to those with a home working contract. However, due to the pandemic the value of these reliefs to individuals forced to work from home has been recognised and has helped support the higher living costs of spending more time at home.

It is no surprise then that almost 800,000 employees that have been working from home have claimed this relief in the last year.

This relief could be worth up to £125 per year for each employee. They can claim the full year’s entitlement if they have been told to work from home by their employer, even if it has been for one day during the tax year.

You can either claim tax relief on:

• £6 a week from 6 April 2020 (for previous tax years the rate is £4 a week) – you will not need to keep evidence of your extra costs
• the exact amount of extra costs you’ve incurred above the weekly amount – you will need evidence such as receipts, bills or contracts

You will get tax relief based on the rate at which you pay tax.

For example, if you pay the 20 per cent basic rate of tax and claim tax relief on £6 a week you would get £1.20 per week in tax relief (20 per cent of £6).

Employees who have either returned to working in an office since early April or are preparing for their return can still claim the working from home tax relief and benefit from the full year’s relief for the 2021 to 2022 tax year, as it isn’t on a pro-rata basis and depending on an individual’s circumstances, is either claimed through self-assessment or the on-line portal which can be found here.

Employees can apply directly themselves and receive the full tax relief that is due. Once their application has been approved, their tax code will be automatically adjusted for the 2021 to 2022 tax year, receiving the tax relief directly through their salary.

To find out how home working may affect your employees and payroll processes, please contact us.