The tax-free working at home allowance that may be paid by employers to employees who are required to work at home, was increased to £6 per week (£26 per month) on 6 April 2020, as we explained on 9 April.
Where an employee is not paid this allowance by their employer, but they do work at home on a regular basis as agreed with the employer, they can claim a tax deduction of the same amount, as we outlined on 21 May 2020.
Now that lockdown has lifted in many areas, employers are giving their staff the option to work at home or in the office, so there is an element of choice for the employee. This would normally prevent the employee from making a claim for the homeworking deduction, as the HMRC guidance says: “You cannot claim tax relief if you choose to work from home”.
However, HMRC has relaxed this compulsion requirement for the whole of 2020/21, and will allow employees to make a claim for the £6 per week deduction if they have a mixture of home and office working. The deductible amount does not have to be pro-rated for those who work part of their time at home and part in the office.
The employee can claim online using the link below, or submit a form P87, online or by post. A separate claim must be submitted for each tax year, and taxpayers have up to four years from the end of the tax year to submit a claim. Claims can also be submitted in-year, ie now for 2020/21.
Self-employed individuals can claim a similar simplified deduction of up to £26 per month in their accounts, if they use their home for business for 101 hours or more per month. Lower deductions are permitted for fewer hours. Alternatively, the self-employed can claim a proportion of the actual costs of running the home, as those costs relate to the business use.