People working from home for even a single day this year will be able to claim tax relief against rising costs as the fallout from the Covid-19 pandemic continues.
HM Revenue & Customs has confirmed to This is Money that the work-at-home tax relief program is being extended for the full 2021/22 fiscal year.
Anyone eligible to claim working from home for tax relief last year can also do so. This means that eligible taxpayers can now claim homework tax relief for the 2020/21 and current tax year.
The government still advises people to work from home if possible, which means millions of people will likely be eligible to claim the tax break again this year.
Extended: HM Revenue & Customs confirmed to This is Money that the work-at-home tax relief program is extended for the full 2021/22 new tax year
A spokesperson for HMRC told This is Money: “Clients can claim for the entire 21/22 tax year, even if they have only worked from home for one day so far.
“However, in doing so, they must accept a declaration form stating that they must be able to demonstrate that the additional costs (such as heating, water bills on the meter or calls result from working from home.
“They don’t include costs that would stay the same whether they are working from home or the office.
“It is important to emphasize that to benefit from the tax relief, the employee must perform work which constitutes all or part of the central tasks of his job.”
The application process is quite quick and straightforward and can be completed online through the government website.
You will need a “Government Gateway” user ID and password to claim. You can create a user ID if you do not already have one.
If successful, the claim will change your tax code and you should start to see your pay increase slightly as the tax break goes into effect.
Here are some of the main things to consider if you are considering claiming tax relief for work at home:
Am I eligible for tax relief for working from home?
On its website, the government says people can claim tax relief if they have to work from home regularly for all or part of the week.
He adds, “It includes if you have to work from home because of the coronavirus (COVID-19). ”
Read carefully: there are rules about the additional costs that you can and cannot claim for the work at home tax break for
However, you cannot claim tax relief if you choose to work from home.
Homework tax relief is an individual benefit. But, if you live with other people who have to work from home, they may also apply for tax relief.
If you complete a self-assessment form to pay your taxes, you will not be able to use the government’s online ‘microservice’ to request tax relief, but you will request it through your self-assessment form, whether completed online or by mail.
What additional costs can I request tax relief for?
There are rules about the additional costs for which you can and cannot claim tax relief for working from home.
The government says: “The additional costs include things like heating, metered water bills, home insurance, business calls or a new broadband connection.
“They don’t include costs that would stay the same whether you were working from home or in an office, such as mortgage interest, rent, or council tax.
When you sign up for the working from home tax break, you will be required to sign an online statement stating that the additional costs are due to having to work from home.
How much can you claim?
There are two options.
For the current tax year, you can claim £ 6 per week without having to show or provide any proof of the additional costs you incurred while working from home. For most people, this is probably the easiest option.
You can also choose to claim the exact amount of any additional costs you incur each week working from home, if this exceeds £ 6 per week.
To do this, “you will need proof such as receipts, invoices or contracts,” says the government website.
What tax relief will I get?
How much tax break you get, like last year, will depend on which tax bracket you are in, HMRC says.
If you pay the base tax rate of 20% and ask for a tax break of £ 6 per week, you will get £ 1.20 per week of tax relief, or 20% of £ 6.
A higher rate taxpayer, or 40%, can get £ 2.40 in tax relief per week if they claim the £ 6 per week extra costs incurred by working from home.
So, for the entire 2021/22 tax year, the total work of the home tax relief would be around £ 62 for taxpayers at the base rate, or around £ 124 per year for taxpayers at the base rate. higher rate, assuming £ 6 per week option selected.
‘A welcome gesture from HMRC’
Nimesh Shah, Managing Director of Blick Rothenberg, said: “This is a very welcome and early move by HMRC to make it easy for people to apply for tax relief.
“People will have seen their household bills increase naturally over the past year due to the increase in homeworking, and it is positive that the government has recognized this.
He added, “HMRC’s microservices site was already up and running, so it makes sense for them to expand the system for this fiscal year.
“HMRC is also likely to be wary of people making self-employed claims to work from home this tax year, and the extra time and cost it would take to process them, so it makes sense from their perspective. to just let the system run for another year. “.
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