Many employees were provided with extra support by their employers in 2020/21 to enable them to work in a covid-secure way. HMRC introduced a number of concessions to ensure that employees are not taxed on the benefit of this necessary support.
Where the employee was required to work at home as the workplace was closed, or they had to self-isolate, the following costs are not treated as taxable benefits, if met by the employer:
- Broadband internet connection, if it wasn’t already available
- Computer tablet, laptops and office supplies
- Reimbursing employee for cost of home office equipment
- Working at home allowance up to £6 per week
Strictly there should be no significant private use of the broadband and equipment to allow the provision to be tax free, but HMRC say the private use measure should be based on the employee’s duties and the need for them to have the equipment or services provided so they can do their job.
There has been no HMRC concession regarding traveling expenses incurred by employees during the pandemic. Some employers paid for taxis for employees or for travel to temporary workplaces, and the rules for both of these expense categories need to be carefully examined to ensure all the conditions are met such that the cost is tax free for the employee. If the benefit is taxable, the employer may want to pay that tax through a payroll settlement agreement (PSA) as described in our newsletter on 22 April 2021.
Written by the Tax Advice Network