Employees can claim tax relief if working from home

The tax free Home Working Allowance is available to employees who are required by their employer to work from home. Employees can be paid £6 a week.

Working from home allowance free from tax

The amount paid to employees is free from income tax and Class 1 national insurance contributions (‘EEs and ‘ERs). In order to receive this payment, employees must be required by their employer to work from home time to time. It may not be available for employees who choose to work from home. 

For a higher rate taxpayer, the £6 a week is equivalent to £538 gross pay, after 40% income tax and 2% employee NICs. The employer would also save 13.8% NICs. 

Employees can claim during the COVID19 pandemic

HMRC have stated that as long as an employee has been required to work from home during 2020/21 because of the COVID19 pandemic, they will accept claims for home working for the 2020/21 full tax year. 

The Home Working Allowance has now been extended to 2021/22 until the end of the pandemic. 

If the employer does not pay the Home Working Allowance

The employee may make a claim for a deduction of £6 a week from their earnings. This is extended to 2021/22. 

For a higher rate taxpayer, this would result in a tax refund of £124.80.

How to make a Home Working Allowance claim

The fastest way to make a claim is to use the HMRC online claims service. This requires the employee to set up a Government Gateway account. 

Alternatively, employees can use HMRC Form P87 to make their claim. 

Need help with the Home Working Allowance?

Whether you are self-employed or own a small business, we can advise and help with your Home Working Allowance claim. To speak to one of our experts, contact us here

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