If your employer requires that you work from home, this will apply to many employees during the various COVID lock-down periods, HMRC will allow you to claim for any extra costs associated with working from home.
To save you calculating what these extra costs might be, HMRC has agreed a claim based on their estimate of the average extra costs you may experience if working from home.
The choices you have are therefore:
- £6 a week from 6 April 2020 (for previous tax years the rate is £4 a week) – you will not need to keep evidence of your extra costs
- the exact amount of extra costs you’ve incurred above the weekly amount – you will need evidence such as receipts, bills or contracts
You will get tax relief based on the rate at which you pay tax. For example, if you pay the 20% basic rate of tax and claim tax relief on £6 a week you would get £1.20 per week in tax relief (20% of £6).
Additional costs include things like heating, metered water bills, home contents insurance, business calls or a new broadband connection. They do not include costs that would stay the same whether you were working at home or in an office, such as mortgage interest, rent or council tax.
You cannot claim tax relief if you choose to work from home.
If your self-employment takes up more than 25 hours a month you could claim based on the following agreed flat rates per month or as above, you could work out the additional costs and claim those. The HMRC agreed rates for the self-employed are:
Hours of business use per month
Flat rate per month
25 to 50
51 to 100
101 and more