One topic that has generated a lot of questions for us since the start of lockdown is what tax relief is available on working from home expenses. The answer, as is often the case, is…it depends!

There are different rules for the employed and self-employed, and employers need to consider what they think is reasonable to pay for.

This is a broad topic, but some of the key points are:

For employees

Employers can pay £6 a week tax-free to their employees who are working from home. If an employer doesn’t pay this, an employee can claim tax relief on the equivalent sum via the Government Gateway. There must be a “homeworking” arrangement in place which is much easier to demonstrate to HMRC in the current climate, although it’s worth noting that this is expected to change again in the future.

Equipment for working from home can also be provided by employers and if, as a result of COVID, the employee has to buy their own equipment and have it reimbursed, that’s ok – normally this would be taxable on the employee.

For the Self-employed

It is quite different for the self-employed who are eligible to claim a proportion of costs, which is likely to be more generous than the relief available for employees.

Beware however of building works and alterations! We often get asked about allowances and reliefs for home offices and, more commonly now, “pods” in the garden for homeworking. This is the equivalent of what can only be described as a tax minefield so tread carefully and make sure you get bespoke advice.

I am always happy to talk through your options with you. Just contact your usual Sagars team member, email me or get in touch by phone 0113 297 6825.

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Kate Naylor
Kate Naylor

Business Tax Partner

Kate spends a lot of time working with businesses and their owners on tax strategies and mitigation, which includes looking at the business and its structure, through to the owners personal tax situation and their longer term goals and plans.

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