Let’s face it, the word ‘relief’ hasn’t been one we’ve been able to use too much in 2020. However, there’s a relief that’s very much welcome for those engaged in flexible working, and that’s Working From Home Relief.
The best news is that if you have been required to work from home, even for a single day, since 6 April, you can claim tax relief for a whole year. That’s great if you’ve been working all year round (or even part-time) from your garden room or office.
The reasons why HMRC has introduced Working From Home Relief (for this tax year) is in recognition that 2020 has been far from normal. Millions of people have adjusted their lives to accommodate flexible working. In doing so, many have gained a better work-life balance and reduced their travel costs, and so the Working From Home Relief is just an extra perk, but a welcome one!
What is Working From Home Relief?
As always, the devil is in the detail and so we can only report on our understanding. Working From Home Relief is tax relief offered to workers who have been told by their employer to work from home. It has been introduced in recognition of the increased household running costs – namely fuel and water.
Provided you have not received home expenses payments from your employer, you can claim the tax relief of up to nearly £125.
If you go for the newly introduced no-receipts-required route, your claim will be based on the assumption that you have incurred costs of £6 per week while working from home. It doesn’t matter whether you were working from your dining room table, home office, or garden room. How much you can claim will depend on how much you earn. For basic tax payers (those earning £12.5k – £50k), the relief is worth 20% of £6 (£1.20 per week), whilst higher rate taxpayers (earning £50k+) can claim 40% (£2.40 per week).
This means, you can reduce your next year’s tax bill by £62.40 or £124.80, depending on your circumstances. Don’t get too excited about receiving a lump sum though. The amount will simply be deducted from your next year’s tax by altering your tax code.
How to Claim Working From Home Relief
Almost 55,000 people have claimed Working From Home Relief already because the Government and HMRC have made it easy to do so.
HMRC’s revamped system and new online platform means it’s incredibly straightforward to register your claim. Simply visit the HMRC microservice, where you’ll be guided through the process.
You will not need to show any receipts or letters from your employer. It also doesn’t matter for how long you worked from home, so long as you did. This means that if you started flexible working from home because your employer required you to, but you have since returned to the workplace, this will not restrict the relief you can claim during 2020/21.
Remember though, check with your employer that you haven’t already received relief.
To make it easier to understand whether you’re eligible to claim the tax relief, HMRC has created a ‘Check if you can claim’ questionnaire.
You will need a Government Gateway user ID and password. Don’t worry, if you haven’t got one, you can set it up in around 10 minutes.
If you’re setting up a Government Gateway ID for the first time, you will need your National Insurance number and a recent payslip, P60 or a valid UK passport. If you’re flexible working from your garden room, these documents should hopefully be easy to find.
You can also make a claim by phone, by post or through self-assessment (please see note below). Full details can be found on the government’s website.
Once you have submitted a claim for Working From Home Relief, from what we understand, you can expect to hear back from HMRC within a couple of weeks. Although, HRMC, is under a huge amount of pressure and it may well take a little longer as the self-employment 31 January tax return deadline looms.
If you believe you have incurred flexible working costs that are higher than £6 a week, you can claim more. However, you will need to evidence this and show how the costs are directly related to working from home. This could be quite a difficult process, especially if you had to home school children.
Words of Advice
If your employer has not compensated you for working from you, it’s definitely worth claiming through HMRC.
However, there are a few exemptions and things you’ll want to be aware of before starting the process of claiming Working From Home Relief.
If you usually complete a self-assessment form, you will not be able to use HMRC’s micro service. Instead, you can claim the allowance as part of the self-assessment form, where you will be able to claim Working From Home Relief for the entire year, much like the HMRC micro service.
Oh, and check with your employer as you near Christmas. They may choose to compensate you with a flexible working payment in your December pay, which could mean accidentally claiming twice.
If your partner has also been asked to work from home since the pandemic started, and they have not received a payment from their employer, they may also be able to make a claim.
If you’re fortunate enough to have a garden room…
You wouldn’t have used as much electricity and gas as your colleagues working from the house, meaning the payment will be of even greater value to you.
Flexible working from home is likely here to stay. As our working from home survey shows, 70% of businesses say that they would be happy to adopt flexible working. So much so that SMART Garden Offices has seen a real uptick in employees purchasing a garden room.
Available in seven designs, 64 sizes and 13 colours, SMART has a wide range of garden offices to choose from. There’s a garden room for every space starting from just £7,944, with monthly finance available.
Please feel free to download a copy of our brochure, which is packed full of inspiration and ideas.