If your employer requires you to work from home, you've always been able to claim for increased costs, eg, heat or electricity, for the specific time at home. Yet during the 2020 lockdown, HM Revenue & Customs (HMRC) launched a 'microservice' which, even if you only needed to work from home for a day, allowed you to get a WHOLE year's tax relief.
That now applies for the new 2021/22 tax year too – meaning many are due TWO years' relief, worth up to £280. For most people this is simple to do, so I want to take you through it step by step (do note there's a separate route if you do self-assessment via a form).
These changes are all, of course, driven by the pandemic, which has seen many firms have to close workplaces, sometimes several times, meaning millions of UK staff have been required to work from home temporarily, even if just for part of the week (more info on part-time work rules below). HMRC has specifically confirmed to me that claims from employees working at home due to coronavirus measures, if their usual workplace is closed, count for this relief.
Since I first got tipped off about the microservice, I've pushed hard to make people aware, both here and on my TV show – and that push has worked, with substantially more than two million people having already claimed. And if you're thinking, "I won't claim as I don't feel I deserve it", why not claim and donate it to a charity that helps those who have struggled during this time? For most people, £6-a-week 'costs' is the golden figure To claim the tax relief you must have, and declare that you have had, specific extra costs due to working from home. Yet apportioning extra costs, such as heating and electricity, is tough. Due to that, there is essentially a flat rate of £6 a week available to you. There are two ways to do this:
Employers can pay you £6 a week extra tax-free. Employers can give you an allowance up to this amount and what they give you is free from tax, so you get it all (to give you more, it will need to make special arrangements). But with many firms struggling, they aren't doing this (and they don't have to), so instead you can...
Claim tax relief on £6 a week. If your employer won't pay expenses for your extra costs due to necessary working from home, but you have them, you can ask for the amount to be deducted from your taxable income. To make the process easy, HMRC says that for claims in line with the employers' payment (ie, £6 a week), you won't need to justify that figure – meaning you won't need to keep receipts or prove information. Tax relief of £6 a week equates to a gain of… - £1.20 a week for a basic 20% rate taxpayer (£62.40 a year) - £2.40 a week for a higher 40% rate taxpayer (£124.80 a year) - £2.70 a week for a top 45% rate taxpayer (£140.40 a year)
What if you've more than £6/week increased costs? If you believe you have higher costs, you can claim more, but you will need evidence of the cost increases and must be able to apportion these extra costs specifically to the fact you are working from home – a much more laborious process.
If you prefer to watch rather than read, here's a clip from my ITV The Martin Lewis Money Show, which explains in detail how it works. Clip courtesy of ITV, originally broadcast on 22 October 2020 (so doesn't include the fact you can now claim for the 2021/22 tax year). You can turn on subtitles using the keyboard icon in the bottom right.