There are two sides to monetary assistance for employees who work at home: the working at home allowance (£6 per week) which is payable by employers, and a tax deduction of £6 per week which can be claim in certain circumstances where the allowance is not paid.
The deduction is worth less in cash terms for the employee than the working at home allowance. It is up to the discretion of the employer to pay the allowance when the employee is asked to work at home for all or part of their working hours. If the employer can pay the allowance, the employee is better off if it does.
Where the employer does not pay the working at home allowance, and the employee doesn’t choose to work at home, the employee can claim the working at home deduction. A new claim is required every tax year. The claims made for 2020/21 will not be rolled over to 2021/22.
This is not a blanket or enduring tax relief. It was put in place for employees who were required to work at home during the covid-19 pandemic, and the employer did not reimburse them for the extra costs (eg heat, light, water) for working at home. An employee could always claim theses extra costs, but proving the extent of the additional home working costs was difficult for most employees.
The ICAEW understands that when the pandemic is over the flat rate working at home deduction will cease to apply. The rules will revert to the previous position that there will no flat rate deduction to be claimed for working at home, although the employer will still be able to pay the working at home allowance.
Written by the Tax Advice Network