Claim working from home tax relief for increased household costs

If your employer requires you to work from home, you can claim tax relief for the increased costs which may be associated with this, eg toward heating and electricity. HMRC has confirmed that this includes claims from employees working at home due to COVID-19..

HMRC appreciates it is difficult to work out exactly how much of your heating and electricity costs are based on your working from home, so instead some employers may choose to pay a tax free allowance of £6 per week to eligible employees or HMRC allows employees to claim tax relief on £6 per week. You can apply directly to HMRC to ask for the amount to be deducted from your taxable income. HMRC says that claims in line with the employers’ payment (ie £6 a week) do not need to be justified, so receipts will not be needed. Tax relief on £6 per week equates to a gain of £1.20 a week for basic rate taxpayer or £2.40 a week for a higher rate taxpayer. (Note, however if you are in receipt of the allowance from your employer, you are not eligible to apply for the additional tax relief through HMRC).

From October 2020, you only need to claim once, and you automatically can have it applied to this full tax year at the £6 per week relief rate. That’s a gain of £62 per year for basic rate taxpayers or £124 per year for higher rate taxpayers, payable if you have had to work from home AT ANY POINT since 6 April 2020 (even on a part-time, or rotational basis and even if others in your organisation are going into work some or all of the time).

How to claim

To process these claims, in October 2020, HMRC set up new webpage that will automatically apply the whole 2020-2021 tax relief via your tax code.

You will need to have your Government Gateway ID to apply (if you don’t have one, you can create one as part of the process). You will receive the tax relief through a change to your tax code, which is what indicates to your employer how much tax to take off your salary. It should be amended in your personal tax account within a few days resulting in you paying less tax each month for the rest of the tax year, meaning you will take home more money.

For advice on this, or any other financial support your family may be entitled to, contact our Family Benefits Advice Service on 028 9267 8200 or email hello@employersforchildcare.org.