Working from Home Expenses: All You Need to Know About WFH Tax Relief

PayFit
Last updated on 20.01.2023

Key Update:

Got employees who’ve yet to claim working-from-home expenses? They can still do so until 2025 and 2026. PayFit covers all the latest on WFH tax relief.

We look at what it means, what employees can claim, and how they can apply for relief.

It’s important to note that you can indeed backdate claims. That means employees may be able to claim up to £280 in tax relief, especially if they claim for both pandemic years. While some workers may also be able to claim for this tax year, most won’t qualify.

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Background: What is WFH Tax Relief?

Work-from-home tax relief came about due to the pandemic and millions of people being told by their employers to work from home. 

During this time, HMRC put a scheme in place to help employees cover extra costs that arose from working from home (WFH). A designated portal was set up where workers could (and still can!) claim different types of working-from-home expenses.

What is the deadline to apply for WFH tax relief?

If they haven’t done so already, employees can still apply for the rebate. If they worked from home during the 2020/21 and 2021/22 tax years, HMRC’s online portal is still up and running and will continue to be so until the 5th of April 2025  for 2020/21 tax year claims, and the same date in 2026 for 2021/22 claims.

PayFit Top Tip:

Remember, employees can backdate their claims. So if you have employees who haven’t applied for rebates because they think it’s too late, it’s worth encouraging them to do so.

What about the 2022/2023 tax year? Can employees claim for this year too?

Not really. Barring a few exceptions, most workers won’t be able to claim any work-from-home expenses for the current tax year, given it’s no longer a legal requirement to work from home. In other words, a working-from-home allowance for the 2022/2023 tax year isn’t really a thing. 

What costs can be included?

Employees can raise a claim for the following costs:

  • heating

  • metered water bills

  • contents insurance

  • business calls

  • new broadband connection

Fixed costs that would stay the same regardless of whether someone worked at home or an office – e.g. rent – are not applicable. 

How can employees claim relief?

There are two ways for employees to claim relief:

  1. The first is through you, the employer, who can cover the cost of working from home by paying these into wages tax-free.

  2. Alternatively, employees can raise a claim directly with HMRC. This is a better option for your business as HMRC will foot the cost instead.

Regardless of which option your workers go for, they can’t choose both. In other words, employees cannot claim relief if you, as the employer, pay off these expenses.

PayFit Top Tip:

If employees want to claim through HMRC, they’ll need their Government Gateway user ID and password. Creating a Government Gateway ID usually takes about 10 minutes.

The process is more straightforward if someone has their NI number and a recent payslip, P60 or UK driving licence to hand.

How much tax relief are employees entitled to?

Put simply, if employees claim the relief through HMRC, the amount an employee can receive will depend on the rate of income tax they pay:

  • Those in the 20% bracket will get £1.20 a week

  • Higher-rate taxpayers on %40 will get £2.40 a week

  • Taxpayers in the highest bracket can get £2.70 a week

Who is eligible for relief?

While both part-time and full-time employees can apply, not everyone can claim WFH expenses accrued during the pandemic. Those who made a conscious choice to work from home, for instance, don’t qualify

An employee is eligible if:

  • Their employer told them to WFH. If they chose to work from home, then they cannot claim this type of relief.

  • They were burdened with higher costs as a result of working from home. That being said, proof of evidence isn’t required. 

  • They weren’t receiving expenses directly from their employer to cover extra WFH costs. 

Still unsure if an employee is eligible? This government tool can help them find out.

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