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COVID-19: employees can claim allowance for working from home

Updated 15 October: Employees required to work from home can have a £6 per week or £26 per month allowance paid tax-free by employers or, during the pandemic, can claim a deduction from earnings for this allowance, HMRC has confirmed.

The allowance is to cover tax-deductible additional costs that employees who are required to work from home have incurred, such as heating and lighting the workroom, and business telephone calls.

Employees can claim a fixed amount of £4 per week up to 5 April 2020 then £6 per week thereafter. Alternatively, employees can claim relief on the actual amounts incurred, subject to being able to provide evidence, such as phone bills.

The relaxation to enable employees working at home because of COVID-19 to claim a deduction (under 336 ITEPA 2003) where they have not been reimbursed by their employer (which would be exempt under s316A ITEPA 2003) was announced in a Parliamentary question answered on 27 March. 

Employees who are not reimbursed by their employer can claim this allowance as a deduction from their earnings in their tax returns (self assessment return or a postal form P87) or via the government gateway to claim tax relief in-year for 2020/21 through the code number. To find out which route to use, visit HMRC’s new online claims checker.

ICAEW understands that these rules will revert to the previous position under which the allowance is tax-free only where paid by employers when the pandemic is over.

This relaxation is explained in HMRC’s guidance at EIM32815 and the normal conditions that need to be met are in EIM32760

HMRC has confirmed that the £6 per week/£26 per month is available in full, even if an employee splits their time between home and office: ie it does not need to be pro-rated over the number of days spent each week at home and in the office.

Claims will not be rolled forward so, if applicable, a new claim will be needed next year.

ICAEW understands that if an employee who has told HMRC that they are working from home returns to working in the office, there is no requirement for the employee to tell HMRC.

See EIM32825 for the relationship between:

  • Employees’ expenses deductible under s336 ITEPA 2003, and
  • Reimbursements by employers exempted under s316A ITEPA 2003.