HMRC has revealed almost 800,000 employees working from home during the pandemic have now claimed tax relief on household related costs since April.
The savings are worth up to £125 per year for each employee, and eligible workers 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.
Anyone who has 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 2021/22.
It is quick and easy to claim via HMRC’s online portal 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 2021/22 tax year, receiving the tax relief directly through their salary.
But note, agents cannot use the online portal to apply on a customer’s behalf.
Those eligible can claim tax relief based on the rate at which they pay tax. For example, if an employed worker pays the 20% basic rate of tax and claims tax relief on £6 a week, they would receive £1.20 a week in tax relief (20% of £6 a week) towards the cost of their household bills. Higher rate taxpayers would receive £2.40 a week (40% of £6 a week). Over the year, this means customers can reduce the tax they pay by £62.40 or £124.80, respectively.
If employees were required to work from home in the 2020/21 tax year but did not claim for the tax relief, they have not missed out; HMRC will accept backdated claims for up to four years. They will receive a lump sum payment for any successful backdated claims.