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WFH tax relief vs Home Office Allowance: what’s the difference?

  • 4 min read
  • Last updated 6 Jun 2022

Since many of us have been working from home due to the pandemic, there’s been a rise in extra costs we normally wouldn’t have. These include heating, electricity, buying office equipment, and so on.

Although the coffee is infinite and the slippers are fluffy, WFH has increased expenses for many families which is something HMRC might be able to help with.

Can I claim both home-working allowances?

Good question! No, you can’t claim both. The reason for that is that these two allowances, although they seem very similar, are different in who they serve. Here’s how.

The Home Office Allowance is specifically for self-employed people who work out of their home, which includes those who file a Self Assessment. Try and do some calculations beforehand so you know what to expect.

The second, the work from home tax relief, is for those who would usually go into work but had to work at home as required by the government or their employer due to the pandemic. You also cannot claim this if you do your tax return via Self Assessment.

OK, what is the working from home tax relief?

The work from home tax relief is just that –  a tax relief that people can claim back on expenses incurred from working from home. Specifically, it’s expenses you wouldn’t have if you were working from the office. Although travel and commuting costs may have lessened, expenses such as heating, lighting, and metered water may have increased. 

Who is the relief for?

Unfortunately, not everyone will be eligible to claim. According to HMRC, in order to claim the tax relief for working from home, you must:

  • Only claim expenses for working at home because of the pandemic/COVID-19
  • Not pay tax via Self Assessment
  • Not already have your expenses paid by your employer
  • Have encountered higher costs working from home

You’re eligible to claim the work from home tax relief for the full tax year even if you were required to work at home by your employer for just one day.

How much will I get?

The amount of HMRC working from home tax relief you get is based on the rate of tax that you pay. This means it varies from person to person. The most you can receive in a year is £125. HMRC allows you to claim £6 a week from April 2020 and states that you do not need to keep proof of your costs.

Here’s an example:

If you claim £6 a week and you pay the 20% basic tax rate then the weekly total you will receive is £1.20 in tax relief. This equates to about £60 for the year.

Claim tax relief for working from home

To claim the relief, just go to HMRC’s microsite and apply there directly. You will need your Government Gateway username and password to log in. If you don’t already have one, you’ll need the following to create one:

What is the Home Office Allowance?

If you’re self-employed and you work from home, then you are eligible to claim the flat rate Home Office Allowance. The amount you can claim depends on how many hours you work from home each month.  The method to calculate the allowance is done through a system called simplified expenses

Who is the Home Office Allowance for?

The Home Office Allowance is for people that are self-employed (sole traders) that use their home to work from, instead of an office. This also includes those who pay tax through a Self Assessment. As a result of your home also being your office space, there are certain things that you can expense. 

This includes:

  • Accounting costs
  • Bookkeeping costs
  • Home office equipment
  • A portion of your utilities
  • Any other work-related costs

How much will I get?

It’s pretty simple – literally.  Because the Home Office Allowance is calculated through simplified expenses, it’s a flat rate charge that you can claim if you work over 25 hours or more a month from home. The following rates do not include internet or telephone expenses. 

Hours of business use per monthFlat rate that you can claim
25 – 50 hours£10 per month
51 – 100 hours£18 per month
More than 101 hours£26 per month

For other expenses, you wouldn’t use the simplified expenses method and what you expense varies from person to person. You can claim expenses like these by working out the exact costs. 

Great! How do I claim?

You’ll be able to claim the Home Office Allowance through your Self Assessment. Along with your main SA100 form, you’ll need to fill out the SA103 as well, detailing the expenses and allowances.

However, if you want to work out your exact costs, you will need to whip out those maths skills (or lack there of). Not to worry, nothing the calculator on your smartphone can’t help with. Be aware that the number of rooms in your property also impacts how much you can claim. It might make more sense for you to claim based on your household usage, so let’s get into it.

How do I calculate based on my household usage?

Step 1:

Add up your household fixed expenses (mortgage/rent + council tax + bills… etc)

Step 2:

Multiply this number by the space in your home you use for work. This is usually the number of rooms you use for work divided by the total number of rooms in the house.

Step 3: 

Multiply the number you get in Step 2 by the percentage of time (in hours) you use that space for work purposes. To calculate this number, divide the amount of time you use this space for work by the amount you use it in total.

Confused? Yep, you’re not alone.

Here’s the calculation in image form to make it a bit clearer.

…but if you want to avoid doing any maths, you can head to the HMRC website where they have a simplified expenses checker to help you decide what the best allowance for you is and which method you should use. 

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