With the increasing trend of remote work in the UK, it is essential to understand the tax benefits available for individuals working from home. This comprehensive guide will help you navigate the process of claiming working from home tax relief 2022-23, so you can make the most of your remote work situation.
Eligibility for Working from Home Tax Relief
Employees and homeworkers
Employees and homeworkers who are required to work from home due to their job or employer’s choice can claim tax relief on additional expenses incurred as a result of working from home.
Self-employed individuals
Self-employed individuals who work from home can also claim tax relief on certain expenses incurred while running their business from home.
Expenses covered under Working from Home Tax Relief
Additional heating and electricity
You can claim tax relief on additional heating and electricity expenses incurred due to working from home.
Telephone and broadband
If you have increased telephone or broadband costs due to working from home, you may be eligible for tax relief on these expenses.
Equipment and furniture
In some cases, you may be able to claim tax relief on the cost of office equipment and furniture purchased for use while working from home.
Claiming tax relief for employees
Flat rate method
Employees can claim a flat rate of £6 per week or £26 per month without having to provide any evidence of additional expenses.
Actual costs method
If your actual expenses exceed the flat rate, you can claim tax relief on the actual costs incurred. However, you will need to provide evidence of these expenses, such as bills or receipts.
Claiming tax relief for self-employed individuals
Simplified expenses method
Self-employed individuals can use the simplified expenses method to calculate their allowable expenses based on a flat rate for the number of hours worked from home each month.
Actual costs method
Alternatively, self-employed individuals can claim tax relief on the actual costs incurred for working from home, provided they have evidence of these expenses.
How to claim Working from Home Tax Relief
Using your Personal Tax Account
You can claim working from home tax relief online through your Personal Tax Account on the HMRC website.
Filling out a self-assessment tax return
If you are self-employed, you can claim tax relief for your expenses by completing the relevant sections of your self-assessment tax return.
Claiming through your employer
In some cases, your employer may reimburse your expenses directly, and they will make the necessary adjustments to your tax code.
Tax relief limitations and exclusions
It’s important to note that tax relief for working from home expenses is only available for costs that are exclusively and necessarily incurred for work purposes. You cannot claim tax relief on expenses that would have been incurred regardless of working from home, such as mortgage interest, rent, or council tax.
Keeping records and receipts
To support your claim, it’s essential to keep accurate records and receipts of the expenses you’re claiming tax relief on. This is particularly important if you’re claiming based on actual costs, as HMRC may request evidence to substantiate your claim.
How the tax relief is paid
Tax relief for working from home expenses is typically provided by adjusting your tax code, which reduces the amount of income tax you pay throughout the tax year. If you’re self-employed and claim through your self-assessment tax return, the relief will be factored into your overall tax calculation.
Possible changes in the future
As remote work continues to grow in popularity, the government may review and update the rules surrounding working from home tax relief. It’s essential to stay informed of any changes to ensure you’re claiming the appropriate amount of tax relief for your situation.
Also Read: Inheritance Tax for Unmarried Couples: What You Need to Know to Protect Your Estate
Conclusion
Claiming working from home tax relief can help offset the additional costs incurred when working remotely. By understanding the eligibility criteria, available expenses, and the claiming process, you can ensure you’re maximising your tax savings for the 2022-23 tax year.
FAQs
- What if I only work from home part-time?
You can still claim working from home tax relief if you work from home part-time. The amount of relief you can claim may be prorated based on the number of days you work from home each week.
- Can I claim tax relief if my employer provides a work-from-home allowance?
If your employer provides a work-from-home allowance, you cannot claim tax relief on the same expenses covered by the allowance. However, if you have additional expenses not covered by the allowance, you may still be eligible for tax relief.
- Do I need to claim working from home tax relief every year?
Yes, you need to claim working from home tax relief each tax year, as the relief does not automatically carry over from one year to the next.
- What if my employer reimburses me for some, but not all, of my working from home expenses?
If your employer reimburses you for some expenses, you can only claim tax relief on the remaining, unreimbursed expenses, provided they meet the eligibility criteria.
- Can I claim tax relief for a home office renovation or improvement?
In general, you cannot claim tax relief for home office renovations or improvements, as these costs are considered capital expenses. However, you may be able to claim tax relief for the cost of specific office equipment or furniture necessary for your work.