At the beginning of the COVID-19 pandemic in March 2020, the UK government encouraged the public to work from home (WFH) where possible. This guidance was followed by some new rules on claiming tax relief, helping to combat the inevitable rise in household costs that stemmed from working from home instead of the office.
Energy costs in particular increased for home workers. A 2021 study by Nottingham Trent University found workers could pay up to £45 more a month in energy costs. This was before the OFGEM energy price cap increases starting in April 2022. It’s been recently announced that the rules have changed for those working from home, which could affect millions of people.
We explain the new changes to work-from-home tax relief, how to make a claim or a backdated claim, and what the relief can be used for.
What Are The New Work From Home Tax Relief Changes?
The working from home tax relief was claimed by more than 3 million people for the 2020/21 tax year.
However, as more workers have returned to the office permanently, or through hybrid working, the rules have changed from April 2022. Even if you have previously made a successful claim, you might not be able to claim the deduction for the 2022/23 tax year. UK workers could claim some tax relief if working from home partially or fully in 2020 and 2021, due COVID-19. In fact, you could claim tax relief on £6 per week without any evidence.
However, as of 6th April 2022, this stance has changed. Now, you can only make a claim if you have to work from home, not if you simply chose to. You can claim tax relief if you have to work from home, for example because:
- your job requires you to live far away from your office
- your employer does not have an office
Who Is Now Eligible For Work From Home Tax Relief?
You can only claim tax relief if you have to work from home and you’re not receiving expenses directly from your employer to cover the extra costs of working from home. You cannot claim tax relief if you choose to work from home. This includes if:
- your employment contract lets you work from home some or all of the time
- you work from home because of coronavirus (COVID-19)
- your employer has an office, but you cannot go there sometimes because it’s full
So, if you work from home simply because of COVID-19, your contract is flexible on whether you work at the office some or all of the time, or your office is sometimes full so you choose to work from home, you can’t claim work from home tax relief for the 2022/23 tax year. You can only claim for things to do with your work, such as:
- business phone calls
- gas and electricity for your work area
Nordens’ Tax Manager, Adam Truluck, believes, “Although the WFH allowance has been around for many years, it became popularised during COVID as many people were forced to work at home. However, since COVID this allowance has been taken advantage of. There is no time limit on it, meaning you could work at home for one day of the year and claim the whole allowance. Many people were claiming the allowance just because they could. It’s not a surprise that HMRC have now tightened the rules around the allowance to make it more realistic again. If you are concerned how this will affect you, please do not hesitate to get in touch with me and I will be more than happy to explain your options to you.”
Can I Backdate My Tax Relief Claim?
Yes, you can backdate your claim for up to 4 years. This is helpful if you began working from home in March 2020 and didn’t make a claim at the time. Even if you are no longer eligible under the new rules you can still backdate your claim. Here are the deadlines for backdating claims:
- 5th April 2025 – Deadline to claim for the 2020/21 tax year working from home tax relief.
- 5th April 2026 – Deadline to claim for the 2021/22 tax year working from home tax relief.
How Much Tax Relief Could You Be Entitled To?
The amount you get depends on what rate taxpayer you are. Here is what you could get:
- Basic rate taxpayer (20%) – Claim £1.20 per week or £62.40 per tax year
- Higher rate taxpayer (40%) – Claim £2.40 per week or £124.80 per tax year
- Additional rate taxpayer (45%) – Claim £2.70 per week or £140.40 per tax year
You can also claim the exact amount of extra costs you’ve incurred above the £6 a week amount, but you’ll need evidence such as receipts, bills or contracts to do this.
What Can You Actually Claim Tax Relief For?
You can claim working from home tax relief for things that help you do your job, such as gas and electricity, metered water, business phone calls and internet access. Potentially you can even claim on equipment you’ve bought, like computers, desks and chairs.
In order to make a claim, you may need to create your Government Gateway. If needed, you’ll need your NI number and a form of ID (e.g. P60 or valid UK passport). You’ll also need evidence like receipts and bills to hand if you’re looking to claim an exact amount for costs. Once your application has been approved, your 2022/23 tax code will be adjusted, so you’ll receive this tax relief directly through your salary.
We hope this has outlined to you the new changes to the work from home tax relief and how to claim. If you’d like to know any further information, or anything accounting-related, please do not hesitate to get in contact with us at Nordens, where one of our trusted advisors would be happy to talk you through your query.