Working from Home due to COVID-19 Restrictions
You'll remember that on 23rd March 2020, the prime minister declared that we must all 'stay at home' in his announcement of the first UK lockdown due to COVID-19. These were difficult times for all, and the performance industry had a particularly rough ride for the following years, as I'm sure you know.
Employment
For people who were employed through the PAYE system in tax year 20/21 and/or 21/22, perhaps teaching at a school over video link, HMRC allowed a special dispensation to simplify the existing rules on working from home allowance for employees:
Essentially, if government guidelines or your employer required you to work from home for just 1 day of the year, then you are allowed to claim £6 per week for the entire year.
That's a £312 allowable deduction against your employment income for each year, which gives you £62.40 per year if you're a basic rate tax payer (charged at 20%), or £124.80 per year if you have enough income over the higher rate threshold (charged at 40%), or £140.40 if you have enough income over the additional rate threshold (charged at 45%). You don't even need to keep any records of your extra costs.
For those who don't file Self-Assessment returns, to make it really easy for you, HMRC have created the following portal (just click on 'check if you can claim' at the bottom of the page):
Claim tax relief for your job expenses: Working from home - GOV.UK (www.gov.uk)
(disclaimer: this link is valid at the time of publishing this blog but may change in future)
If you do file Self-Assessment returns then you need to enter the expense against your employment income there and retrospectively amend your 20/21 tax return to do the same.
There are a few criteria that need to be met, which include,
Your employer cannot have reimbursed you your extra expenses already.
You cannot claim for when you have chosen to work from home, only when you had no choice (meaning few workers will be able to claim for 22/23).
If you had applied at the time, then HMRC would have adjusted your tax code to ensure that this was given to you via PAYE, but they are accepting backdated claims for up to 4 years, in which case you may receive a lump sum.
Self-employment
Whilst there is no specific dispensation for the period of COVID-19 restrictions, people who are self-employed and work from home are allowed to claim a proportion of your actual costs of running your home, based on the number of hours worked (can include practice, research, teaching, administration etc.) and the proportion of the home which is used for business. This can include the costs of Energy (not water), Council Tax, Rent or Mortgage Interest and more…
Alternatively, you can claim flat rate simplified expenses per month based on the number of hours worked, but these tend not to be very generous by comparison.
So there you go. It was a very difficult time, and whilst a little tax relief is unlikely to make a meaningful difference, you may as well claim what you are due and enjoy a bit of extra cash.