Over the last 3 years the number of people in the UK who have started working from home has leapt from 5.7% 2019 to 40% in 2023.
As you may recall, during the covid pandemic a huge number of working people in the UK were instructed to work from home by their employer and the government. This resulted in higher household bills such as heating, electric and internet for most.
So to offset some of these incurred costs in 2020 HMRC decided to offer tax-relief of £6 per week for working from home. Which is an increase from the previous figure of £4 per week.
If you currently still work from home, whether you are employed or self-employed, you may be eligible for certain tax-reliefs.
When you were ordered to work at home in the coronavirus period employers had the option of paying £6 a week extra tax-free for those days/weeks. However, as many businesses experienced severe financial difficulty they were not able, or elected, not to do so.
The good news is you can still claim tax relief of potentially up to between £187 and £420 for working from home for the last three years, and in this article we'll explain how.
4 million people plus have already claimed for the 2020/21 and 2021/22 tax years. And you are also able to claim tax relief of £6 per week for working from home for 2022/23 and coming years - if certain conditions apply to you.
For the self-employed
As a self-employed person, you may be allowed to claim more expenses related to working from home than an employee, or director. HMRC allows you to claim relief at a flat-rate of either £10, £18 or £26 per month, depending on the number of hours you typically work from home. And you don’t need to provide any records of your expenses.
If you can prove that your actual costs are higher than the flat rate, then you may also be able to claim a higher amount. You will, though, need supporting evidence to show that the amount you are claiming is no more than the additional expenses you have actually incurred. And you must be able to prove that you personally pay these costs, and that they are not paid by a partner or spouse.
Am I eligible to claim?
Claiming for 2020/21 & 2021/22 (Coronavirus) as an employee
You are eligible to claim working from home allowance for both the 2020/21 and 2021/22 (or just one if you’ve already claimed for the other) tax years if:
- You were required to work from home for at least a period of the year (for even a minimum of one day) by your employer
- You had to pay increased costs as an effect of working from home like heating or electricity. (You are not required to supply evidence of this)
- These increased costs have not already been repaid by your employer
Whether you were employed in the same or different jobs, or multiple part-time jobs, during this period you are still eligible to claim.
Claims for the working from home allowance can be backdated for up to 4 years, so there is still time to claim for both the 2020/21 tax year and the 2021/22 tax year.
It’s been confirmed by HMRC that you have until the 5th April 2025 to make claims for 2020/21 and until 5th April 2026 make claims for 2021/22.
Claiming for 2022/23 and after as an employee
After the coronavirus pandemic the required criteria is now much stricter. And you can’t claim working from home allowance solely because you are working at home due to coronavirus, even if you have tested positive. Or simply because you are allowed, i.e choose, to work from home and if your employer has an office that is open to you on a full/part-time basis, such as hybrid-working.
You are eligible to claim working from home tax relief if:
- Your forced to live at a long distance or out of reach of your office due to the nature of your job
- The person, business, company or organisation that you work for has no office HMRC has stated that these rules will remain for 2023/24.
For employees on higher rates of pay who file self-assessed tax returns the relief for all three years is still available. However, there is an alternative method which involves claiming when you submit your SA form.
If you are unsure about this or tax in general, speak with our friendly advisors who’ll be happy to explain it.
If you want to claim form the tax years 2020/21 and 2021/22 see these instructions:
Online: To apply for working from home tax relief, complete the 'Other expenses and capital allowances' section in the employment segment. If you have already submitted your 2021/22 tax return, revisit the online platform and modify this section before January 31st, 2024.
Paper: On the full return form you need to complete section 20 and section 2.5 if you're using the short form. You’ll have to download and complete a new tax-return with the word ‘amendment’ written on every page and send it back to HMRC.
If you’re self-employed and work at home you are probably entitled to claim tax-relief for part of your work at home costs for all the same things as employees, as well as others like:
- Mortgage interest
- Council tax
- Home insurance
- Cleaning services/supplies
- Home maintenance
Furthermore, you might also be able to claim 100% of costs that are exclusively business related such as:
- Cleaning of office space if it is exclusive of the cleaning of any other part of your home
- A second phone line used for businesses comms
- Insurance on your business
- Repairs of your home office and business equipment
- All business related calls from your home phone
*If estimating your tax-deductions sounds like a lot of math, try using one Crunch’s free tax calculators and save yourself hours.
How much will you get?
Currently you will receive tax-relief on £6 per week on your income. This is the same if you are claiming for the tax years during coronavirus, 2020/21 and 2021/22, or just 2022/23. Which will be paid in one lump-sum.
The exact figure is dependent on your current income-tax rate, but will be equal to one of the following yearly totals:
- £1.20 a week for a basic 20% rate taxpayer = £62.40
- £2.40 a week for a higher 40% rate taxpayer = £124.80
- £2.70 a week for a top 45% rate taxpayer = £140.40
So if you are claiming for the two coronavirus years and 2023/23 you could receive £421.20. And remember, if you worked at home for just one day during 2020/21 or 2021/22 tax years you can still claim the full amount.
The flat rates for self-employed individuals is or businesses are calculated by the number of hours you work at home or by dividing a total claimable expense, like electricity, by the number of rooms in your house (as one is an office):
- 25 - 50 hours per month - £10
- 51 - 100 hours per month - £18
- 101 hours+ per month - £26
- *example; £500 annual electric bill in a 5 room house - £100
As mentioned, you could potentially claim 100% of business related costs - charged directly to your business.
What if the relief doesn’t cover my extra costs? (employees only)
If whatever amount that you’re entitled to above doesn’t cover the extra costs you have from working at home as an employee, you can apply to claim for ‘actual expenses’. This requires providing evidence of the actual additional amount of money you were forced to spend as a direct result of working from home.
You will need to complete a P87 form which allows home workers to claim expenses up to a maximum amount of £2,500. It’s important to point out that you’ll only receive tax relief on the total figure you can claim for.
And supply the following information:
- Your job title
- Your employer’s name and PAYE reference
How to claim tax-relief for working from home as an employee
You can use HMRC’s microservice to back claim tax-relief for 2020/21 and/or 2021/22 and the current year 2022/23 (the current year separately) by using the government’s microservice on the HMRC website here. It’s quick and easy.
If you want to claim for all three years you can do this by completing the process twice, once for each given period.
Scroll down to the to button section of the page ‘How to Claim’ and click the green start now button. You’ll need a government gateway ID, if you don’t yet have one you’ll be prompted to create one in this claim process.
Answer the first couple questions as requested, on the fourth page you’ll be asked which years you want to claim for. Select whichever applies:
- Just the current tax year 2023-2024
- Previous tax years
- Both the current tax year and previous years
It's worth examining what other work incurred costs you are entitled to claim for as within this process you will be asked if you want to do so.
You will receive the payment for the full annual amount of £6 per week retrospective tax relief, according to your tax bracket, at the time you are claiming for as a cheque or bank transfer.
How to claim tax-relief for working at home if you’re self-employed
To claim as self-employed you need to calculate your expenses and what the amount you can claim as working from home tax-relief is. Then make the claim when you complete your self-assessment. If you are using online accounting software it should probably have a built-in feather for this.
Try using Crunch’s cutting-edge software with industry-exclusive features to make this efficient, fast and simple. As thousands of very happy clients are already doing!
Claiming tax relief for working from home is fairly simple and not very time consuming. It’s an important financial entitlement that can, even if only to a small degree, reduce the burden of additional expenses that come as a result of home working, for higher earners and those on lower salaries alike.