Coronavirus – Tax relief for working from home

Working from home means you can claim some tax relief for some of the extra bills you have to pay depending if you work for a boss or are self-employed.

Employees cannot claim because they choose to work from home, but can offset some of the costs if they are forced to because of coronavirus.

Any claim can only cover work bills, like business telephone calls and any additional costs like gas and electricity for the work space.

Bills you already pay, like broadband, rent or the mortgage are not included..

However, the employer can only pay up to £4 a week towards your work at home costs, but you do not have to keep any financial records.

Tax options

The self-employed, including landlords, have two tax options to claim business costs if they work from home.

Expat landlords can claim the same costs against their property profits because the claim is for a taxpayer with income in the UK regardless of where they carry out their homeworking.

Either claim a flat-rate amount that or make a claim based the actual costs.

The flat rate is also called ‘simplified expenses’ and varies according to the hours worked at home over a 25 hour threshold.

The rates are:

Hours of business use for the monthFlat rate claim
25 to 50£10
51 to 100£18
101 plus£26

Source: HM Revenue & Customs

If you work fewer than 25 hours, claim the £4 a week allowed for employees.

In any case, you don’t have to claim the same number of hours each month, for example:

You work 40 hours from home for 10 months, but 60 hours during the remaining two months:

10 months x £10 = £100
2 months x £18 = £36

Total claim = £136

Which claim should you make?

For most self-employed workers, calculating the actual costs gives a much higher level of tax relief.

The claim depends on the size of the property, hours worked and space used, so varies from person to  person.

The amount will proportion house bills, such as heating, electricity, council tax, your mortgage or rent, internet and telephone use.

HMRC gives this example:

You have four rooms in your home, one of which you use only as an office and excluding bathrooms and kitchens.

The electricity bill for the year is £400. Assuming all the rooms in your home use equal amounts of electricity, you can claim £100 as allowable expenses (£400 divided by four).

If you worked only one day a week from home, you could claim £14.29 as allowable expenses (£100 divided by seven).

To make the claim, you need to keep bills and log the time you spend working at home.

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