Andrew Crossley
Founder of Wocal
Working from home uk
Don't Miss Out: How to Get Tax Relief for Your working from home allowance
According to the U.K government, you may be able to claim working from home tax relief, if you have to work at home for all or part of the week.
Working from home has become increasingly common in the U.K, especially in the wake of the COVID-19 pandemic. As a result, many people are now eligible for a “working from home allowance”
This includes those whose jobs live far away from their office or whose employer does not have an office. However, it’s important to note that you cannot claim tax relief if you choose to work from home.
The types of costs you can claim tax relief for are limited to those that are directly related to your work such as business phone calls, gas and electricity for your work area. You cannot claim for costs that are used for both private and business use, such as rent or broadband access.
The amount you can claim varies depending on whether you claim the standard weekly amount of £6 (previously £4 for previous tax years) or the exact amount of extra costs you’ve incurred above the weekly amount.
If you claim the standard weekly amount, you will not need to keep evidence of your extra costs. However, if you claim the exact amount of extra costs, you will need to provide evidence such as receipts, bills or contracts.
The amount of tax relief you receive will be based on the rate at which you pay tax. For example, if you pay the 20% basic rate of tax and claim tax relief on £6 a week, you would get £1.20 per week in tax relief (20% of £6).
The tax relief is usually given through a change to your tax code.
Here's a step-by-step guide to claiming tax relief for work-from-home expenses:
Gather all necessary information and evidence: Before you can claim tax relief, you’ll need to gather all necessary information and evidence. This includes your employment contract, any bills or receipts related to your work-from-home expenses, and any other relevant documentation.
Make sure you meet the criteria for claiming tax relief. Check if you have to work from home, for example because your job requires you to live far away from your office or your employer does not have an office.
Once you’ve determined your eligibility, calculate your claim. You can either claim tax relief on £6 a week from 6 April 2020 (for previous tax years the rate is £4 a week) or the exact amount of extra costs you’ve incurred above the weekly amount.
Submit your claim to HM Revenue & Customs (HMRC) along with all necessary documentation and evidence.
You’ll usually receive your tax relief through a change to your tax code.
Tax savings for working from home expenses:
Tips and Tricks Working from home can come with additional expenses such as increased electricity and gas bills, business phone calls, and more. Here are some tips and tricks on how to maximize your tax savings for these remote work expenses:
Tip 1: Keep accurate records of your expenses:
Make sure to keep accurate records of all your expenses related to your work from home expenses, including bills, receipts, and any other relevant documentation. This will be necessary when calculating your claim and submitting it to HMRC.
Tip 2: Take advantage of tax deductions:
Make sure to take advantage of all the tax deductions available to you. For example, if you have a dedicated workspace in your home, you may be able to claim a deduction for a portion of your rent or mortgage, as well as your internet and phone bills.
Tip 3: Claim the standard weekly amount:
If you’re short on time or don’t have many expenses, consider claiming the standard weekly amount. This will make the process quicker and easier, and you won’t need to provide evidence of your expenses.
Tip 4: Plan for long-term tax savings:
With the potential for long-term remote work, it’s important to plan for the long-term tax implications. Consider setting aside money each month to cover your expenses and talk to a tax professional to develop a long-term tax strategy.
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If you have an accountant, we would always suggest to ask for their advice or to do this for you.
Tax savings for working from home expenses:
Tax Deductions for Household Expenses Incurred While Working Remotely As a remote worker, you may be eligible for tax deductions on certain household expenses incurred while working remotely. These deductions can help you to save money on your taxes. Some common deductions include:
- Deducting a portion of your rent or mortgage if you have a dedicated workspace in your home
- Deducting a portion of your internet and phone bills if they are used exclusively for business purposes
- Deducting the cost of office supplies and equipment, such as a computer or printer
To claim these deductions, you’ll need to keep accurate records of your expenses and provide documentation such as receipts, bills, or contracts.
Long-term Tax Relief for Remote Workers Working from home has become a long-term reality for many people and with that comes the potential for long-term tax savings. As a remote worker, it’s important to plan for the long-term tax implications of working from home.
This includes setting aside money each month to cover your expenses, and talking to a tax professional to develop a long-term tax strategy.
In conclusion, working from home can come with additional household costs. However, if you meet the eligibility criteria, you may be able to claim tax relief on these costs.
It’s important to note that the amount and type of costs you can claim, as well as the amount of tax relief, are subject to change and it’s best to check the government website or consult with a tax professional for the most up-to-date information.
By following the steps outlined in this guide, you can ensure you’re taking advantage of all available tax deductions and credits, maximizing your tax savings and minimizing your tax liability in the long run.