There is a small, early Christmas gift that HMRC is giving to many employees across the nation. Why, it is a small tax rebate for those that have been required to work from home during lockdown! Apparently over £1m have already claimed this so make sure you do not miss out.
HMRC has for a long time allowed employers to pay a tax-free weekly amount to its employees that it requires to work from home (those that chose to work from home is a different matter). If the employer does not pay such an allowance the employee can make a claim against their income instead. Given lockdown has left many with no choice but to work from home, HMRC have confirmed anyone affected can claim £6 per week against their employment income. The rather generous concession, as confirmed to Martin Lewis (the one with money saving expertise), is that HMRC are allowing you to claim for the full year even if you have been back in the office.
It is a no-brainer to make the claim. It is worth £62 to basic rate taxpayers (£6 x 52 weeks at 20%) and £125 for higher rate taxpayers and takes no time at all. (It is worth £140 to additional rate tax payers but you’d need to submit a tax return due to your income levels so should not be able to use this service. Indeed, if you have to submit a tax return for any reason – e.g. rental income, dividends, self-employment – you won’t be able to use this service and should instead make the claim on your tax return.)
All you need is a HMRC personal tax account (this is normally a 12 digit number) and you can go to the online portal. If you don’t have a tax account yet that is relatively easy to do and something I recommend in general. Just be sure to save the user ID somewhere safe. The process will instruct you to set-up the tax account if you do not have one already so just start with the portal.
Once you’re ready, you will first need to confirm you can indeed make the claim:
If your employer has reimbursed you already then there is no loss to you and therefore no tax relief is available. If they paid you some of your cost (e.g. £2 per week) then you would claim the difference but via an online P87 (same for any other job related expenses that are not fully reimbursed to HMRC’s standard rate, e.g. mileage rates). They will send you to that form instead.
Success! You can now make the claim:
The date is the first day that your employer made you work from home. This will depend from employer to employer but 23 March 2020 was when the first national lockdown began.
Click the button and you are done. Now the only slight disappointment is that HMRC simply adjust your tax code. This means you will see the extra cash in your next salary payments (or the one next one after HMRC have sent the new coding notice to your employer), so not quite as satisfying as receiving a cheque from the taxman in the post!
While the service is not available for self-employed individuals, if they work from home they can still claim for these expenses against their profits. The flat rate offered by HMRC depends on the number of hours worked. There is also the option of claiming the actual costs, but that is another article for another time.
If you want to discuss any of the above, or any other matter, just give us a call on 020 7183 3383 or email info@kma-spotlight.com.
