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Can I claim tax back for working from home?

28th July 2021

work from home tax relief

If you’ve been working out of the office because of the coronavirus pandemic, did you know that you can actually claim tax back for working from home? 

According to the Office for National Statistics, it’s estimated that nearly half of all UK adults were working from home during the height of the pandemic. Besides regular cups of tea and being able to stay in your pyjamas all day, the WFH luxury does come with some extra costs. You might have seen both your electric and heating bills rise over the past few months, or maybe you bought office furniture. As a result, HMRC have made it possible for people working from home to claim tax relief for these expenses. 

If you’re unsure whether you qualify, what you can claim, and how to apply, we’ve put together a handy blog to answer this very thing. 

Here’s everything you need to know about claiming tax back for working from home.

Am I eligible to claim tax back for working from home?

Before you can apply, you need to check whether you’re actually eligible to claim tax back for working from home. To claim, HMRC state that you must:

  • Only claim for expenses for working from home due to Covid-19
  • Not pay tax via Self Assessment
  • Not have already had your expenses paid for by your employer
  • Encountered higher costs due to working from home

If you were told to work from home by your employer, even if it was just for one day, you could still apply to claim tax relief for the whole 2020/21 tax year.

How much tax relief will I get?

The amount you’ll actually receive varies from person to person. The total amount you can claim is worth up to £125 a year, but the actual amount you’ll receive depends on the tax rate you pay. HMRC entitles everyone to claim tax relief of £6 a week, which means:

  1. Basic 20% rate taxpayers can claim £1.20 (20% of £6) a week. This is a gain of £60 a year
  1. Higher 40% rate taxpayers can claim £2.40 (40% of £6) a week. This is a gain of £125 a year

HMRC do not require you to keep evidence of your extra costs.

How do I claim tax relief for working from home?

If you’re eligible to claim tax back for working from home, just head to the government’s microsite

If you haven’t already, you’ll need to create a Government Gateway user ID and password. To do this, you need your National Insurance Number and either a recent payslip, P60 or a valid passport. Once you’ve logged in, you’ll provide information to ensure you’re eligible, such as the date you started working from home. 

HMRC will give you a rebate for the full tax year, even if you’ve only worked from home for a day, and if you’re unsure when you’ll return to the workplace. If your claim is successful, your PAYE tax code will be changed. You’ll receive the tax relief through this, meaning you’ll be able to take home more of your income before tax.

But wait, I’m self-employed!

If you’re self-employed or pay tax through a Self Assessment, then the way you claim tax back for working from home is a little different. 

Self-employed workers can claim for a more proportional part of the costs when working from home. As long as they are used for work, this includes:

  •  Heating
  • Lighting
  • Insurance
  • Mortgage interest
  • Water rates 
  • General maintenance

HMRC will require you to work out this proportion. You do this by accounting for the amount of time you spend at home for work, as well as the size of the area within your house that you use for work purposes. 

Can I use simplified expenses?

If you work at home for more than 25 hours a week you can use HMRC’s simplified expenses system. This uses a flat rate based on the hours you work from home each month.

You claim tax back through your Self Assessment tax return, which you will submit annually to declare your earnings. Expenses you’ve incurred from working from home will be deducted by HMRC from your profits, reducing your overall tax bill.

If you want to know how much you can save on your tax return, take a look with our handy income tax calculator below!

Annual self-employment income
£
Self-employment expenses
£
Select tax year
Income after tax
£37,986
Income tax
£7,300
NI
£3,714
Total income tax
£7,300
£12,500 taxed at 0%
£36,500 taxed at 20% : £7,300
Total NI contributions
£3,714
Class 2 NI: £159
Class 4 NI at 9% : £3,555
What you’re left with
£37,986

Hey there! We really hope this calculator helped you. Tax matters can be a dreadful topic at times. We know. That’s why we started TaxScouts.
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How your income tax is calculated

As a self-employed you have to pay your income tax and national insurance contributions yourself during your annual self assessment. Our calculator helps you quickly assess how much payment is due.

However you may be eligible for a tax refund when:

  1. You already made tax payments for the year but your annual income ended up smaller than planned
  2. You have done things that qualify for tax relief (made private pension contributions, give to charity, etc)

In your case when you earn £49,000:

Income tax breakdown

You pay no income tax on first £12,500 that you make

You pay £7,300 at basic income tax rate (20%) on the next £36,500

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