WFH or Flexible Working? - Tax Relief Warning!

First published on 27 April 2022 by Alastair
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This WFH stuff has led to no end of complications for those of us who have to understand its implications for individual tax-payers.  For example, those of you who are normally employees but who worked from home during the pandemic (almost everyone at one time or another) have been able to claim home office tax relief regardless of how many days you actually worked at home.  HMRC relaxed their interpretation of the rules during Covid and this allowed many people to claim home office relief for the 2020-21, 2021-22 and 2022-23 UK tax years. You could/can claim the £6 per week tax relief in full for each of these tax years, so long as you did actually work from home for a limited period in each of these tax years and your employer required/requires you to do so.

But (you knew there was a but coming, didn’t you), this tax relief is only in place until the end of this tax year (i.e. to 5th April 2023) and so you need to check now to make sure that, if you are eligible, you still receive it (or if you are ineligible that it has not been inadvertently included in your tax code.

This means that employees need firstly to review their PAYE tax codes to see if HMRC has included home office relief.  If it has, but you have not actually been working from home in the current tax year (2022-23), then you need to contact HMRC and get your tax code corrected. If you don’t, you’ll have more tax to pay at the end of the tax year, which in the current cost-of- living crisis is not something you want.

On the other side of the coin, if your tax code does not include this home relief element and your employer specifically required/requires you to work from home - for example to stop the spread of Covid or because your work has been 'relocated' and now is contractually regarded 100% as a home office role, then you can claim this relief.

It is very important to note that this does not apply to the increasingly common hybrid working arrangements where employees spend Tuesday to Thursdays in the office and work the remaining two days at home. This is regarded as flexible working and will not qualify.  Similarly, the relief is not available for anyone who just chooses to work from home: it only applies when your employer requires you to do so.

The specific guidance from HMRC at 6th April 2022 is as follows:

“You can claim if your employer has not already paid your expenses and you have additional household costs as a result of working from home.

‘One of the following must also apply:

- there are no appropriate facilities available for you to perform your job on your employer's premises;

- the nature of the job requires you to live so far from the employer's premises that it is unreasonable for you to travel to those premises on a daily basis;

- you are required, under government restrictions, to work from home.

To claim tax relief, you cannot have just chosen to work from home.”

As always, any questions, please get in touch and we’ll do our best to help!

Vivian Linstrom, M&S Accountancy and Taxation 

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