A temporary tax exemption and National Insurance disregard for employees working from home who need to purchase office equipment will be introduced by the government, revealed the Financial secretary to the Treasury, Jesse Norman, in a written statement (on 13 May).
This will, he said, ensure that these expenses will not attract tax and NICs liabilities where reimbursement by the employer.
The expenditure must meet the following two conditions to be eligible for relief:
1. That equipment is obtained for the sole purpose of enabling the employee to work from home because of the coronavirus outbreak
2. The provision of the equipment would have been exempt from income tax if it had been provided directly to the employee by or on behalf of the employer (under section 316 of ITEPA)
The exemption is a temporary measure and will affect from the day after the regulations come into force until the end of the tax year 2020/21.
HMRC will, he promised, exercise discretion and will not collect tax and NICs due on any reimbursed payments made from 16 March 2020 (the date the government recommended working from home) to the date that these regulations take effect.
This measure is being announced outside the normal fiscal process to ensure that employers and employees are effectively able to manage their working from home arrangements. As soon as possible.
The Government will now lay the statutory instruments to update these changes before the House is due course.
