You may be able to claim tax relief for additional household costs if you have had to work at home on a regular basis, this includes if you have to work from home because of coronavirus (COVID-19), either for all or part of the week.

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.

This tax-free working at home allowance that can be paid by employers to employees who work from home, was increased to £6 per week (£26 per month) on 6 April 2020.

Where an employee is not paid this allowance by their employer, but they do work from home on a regular basis as agreed with the employer, they can claim a tax deduction of the same amount.

Now that lockdown has eased slightly, employers are giving their staff the option to work at home or in the office, so there is an element of choice. This would normally prevent the employee from making a claim for the homeworking deduction, as the HMRC guidance says: “You cannot claim tax relief if you choose to work from home”.

However, HMRC has recently announced that, for the whole of 2020/21, it will allow employees to make a claim for the £6 per week deduction even if they are personally choosing to work from home, whether part-time or full-time.

The employee can claim online using the link below, or submit a form P87, online or by post.

A separate claim must be submitted for each tax year, and taxpayers have up to four years from the end of the tax year to submit a claim. Claims can also be submitted in-year, i.e. now for 2020/21.

The self-employed can claim a similar deduction of up to £26 per month in their accounts if they use their home for business for 101 hours or more per month. Lower deductions are permitted for fewer hours. Alternatively, the self-employed can claim a proportion of the actual costs of running the home, as those costs relate to the business use.

Portal for claiming working at home deduction

As always, contact our tax team if you need any further guidance: