During the Coronavirus outbreak, many of us find ourselves working from home, some for the first time.
Are you enjoying it? Though it has been enforced through tough circumstances, we know from conversations with friends and peers that for some, it has been an eye opener.
Having now realised that remote working is possible, and business operations and productivity is sustainable from home, some of us may be considering never working in an office again.
There will be costs involved when you’re working from home
If you’re considering making remote working a permanent change – remember to look at all the factors involved.
Have you thought about the extra costs incurred whilst spending the whole day working from home? Whilst we may be saving commuting costs, we may be running up other costs without even realising.
- Employees may need to make business phone calls from their home phone
- They may be spending extra on gas and electricity
- Do they require a broadband connection to do their job
- They may have needed to buy their own office supplies
- Some may have needed their own vehicle to carry out remote work.
You can reclaim these additional costs
If you’re a business owner
Check out which expenses are taxable if your employee has been forced to work from home as a result of Coronavirus. Here’s some helpful information from HMRC.
You won’t be able to reclaim costs for any employees you’ve furloughed during this time. However those who are still working from home are eligible.
- Expenses or benefits related to coronavirus can be reported on your PAYE Settlement Agreement.
- This applies to items necessary for work during the coronavirus period – for example, a new desk can go onto the PAYE Settlement Agreement, but a new sofa cannot.
- You can settle tax and national insurance contributions on these expenses, where usually the responsibility falls on your employee.
If you’re an employee
If you have been told to work from home as a result of the temporary closure of your workplace, your employer will be able to provide a tax-free payment to you as a means of offsetting reasonable additional household expenses.
- In addition to your salary – HMRC have agreed that this tax free payment will be paid at a rate of £6 per week or £26 per month (£4 per week before 6 April 2020) without the need to keep any records.
- If you want to claim a higher amount – you will need to provide evidence that you actually incurred additional costs of more than £6 per week. (Note that additional costs do not include those that arise regardless of working from home, such as council tax, mortgage, broadband/telephone charges that do not depend on usage. These cannot be claimed).
It is up to your employer to decide whether to make the payment, but you also have an option if they decide not to.
- You can claim tax relief from HMRC on the additional household costs of your home office – again up to £6 per week (£4 before 6 April 2020) before the need to provide evidence. If you want to claim tax relief on larger amounts then you will need to keep records of these costs. You’ll also need to be able to show that they were incurred ‘wholly, exclusively and necessarily’ in the performance of your work.
So maybe working from home really doesn’t have any downsides after all?
Make sure you’re always claiming what you can!
Whether you’re planning on taking your business remote, or you’re operating as usual – there are lots of ways you can save tax. Making the most of your expense claims may just give you the extra cashflow boost you need right now. So please do reach out if you need help reclaiming your costs.