From 6 April 2020, employers have been able to pay employees up to £6 a week tax-free to cover the additional costs of working from home.
But as of 1 October, HMRC has run an online portal where employees can apply for the tax relief themselves where they have been told to work from home by their employer in a bid to curb the spread of coronavirus.
Between 1 and 11 October, more than 54,800 claims were made via the online portal.
Employees who have not received the working from home expenses payment direct from their employer can apply to receive the tax relief from HMRC. Applicants won’t have to provide evidence of extra costs incurred to claim the tax relief.
How does the tax relief work?
Eligible taxpayers can claim tax relief based on the rate at which they pay tax. For example, if an employed worker pays the 20 per cent basic rate of tax and claims tax relief on £6 a week, they would receive £1.20 a week in tax relief – or 20 per cent of £6 a week – towards the cost of their household bills.
Higher rate taxpayers would therefore receive £2.40 a week – 40 per cent of £6 a week. Over the course of the year, this could mean taxpayers can reduce the tax they pay by £62.40 or £124.80 respectively.
HMRC’s interim director general of customer services, Karl Khan, said: “We want everyone to get the money that they are entitled to, so we’ve made the online service as easy to use as we can – it takes just a few minutes to make a claim.”
Once the application has been approved, your tax code for the 2020/21 tax year will be adjusted. The tax relief will be received directly through salaries and employees will continue to receive the adjustment until March 2021.
Alternatively, employees could receive the tax relief as a lump sum payment if they wait and apply once the 2020 to 2021 tax year has ended.
Cleaning uniforms and other expenses
HMRC is also reminding employed workers, such as healthcare workers and care home staff, that they can also claim tax relief on work-related expenses, including cleaning their work uniforms.
Employees who clean, replace or repair uniform or tools, or pay fees and subscriptions for their work can apply online directly to HMRC and see if they’re eligible for tax relief on work expenses.
In 2018/19, more than 500,000 customers – 66 per cent of total expense claims – applied for the tax relief using an agent rather than directly from HMRC and will have had to pay fees or commission. But those who are paid through Pay As You Earn (PAYE) can claim directly to HMRC and keep all of the money which they are entitled to.
Agents will not be able to use the new service to apply for the relief on a customer’s behalf. This means customers will receive 100 per cent of the tax relief that is due.