How to easily claim £125 working from home tax relief

Since April 2021, almost 800,000 who have been working from home have claimed tax relief on their household related expenses.

It’s not complicated to do, will take minutes, and is worth up to £125 per year for each employee.

Even if you’ve worked one day from home in the last tax year, you can claim the full year’s entitlement.

Here’s what you need to know and how to apply.

The world has changed a lot and I know so many people who are now working from home all the time.

At first, the idea of working in PJs (apart from when you need to do a Zoom call!) and saving money on commuting and lunches/coffees were brilliant.

Being at home 24/7 did mean an increase in the electric bill, but not enough to worry about, especially because of the other big savings.

However, now winter is coming, and it’ll be a lot colder, those household bills will be going up, even more, so trying to break even may be harder.

Working from home tax relief

If you’re working from home since the lockdown you may not be aware that you can apply for tax relief.

The idea is that the relief helps towards any additional household costs you’ve got to pay from being at home instead of at a place of work.

There is a possibility that the working from home tax relief may be scrapped.

If you’re eligible, it’s best to apply while you still have a chance.

Being at home regularly in the day will mean you’ll have higher heating and water bills, plus you may need to alter your home contents insurance, you might have business calls that aren’t part of your package and you might need to get a new broadband connection.

To get the tax relief, it doesn’t matter if you’re part-time or full time, just as long as you’re working from home on a regular basis.

Even if you’ve only worked one day during the tax year, you can still claim the full year’s entitlement.

But, if you choose to work from home (rather than your employer/the government asking that you do) you won’t be able to claim the tax relief.

Also, if your employer has already paid you any additional expenses or is paying you an allowance to cover the cost of working from home, you cannot apply.

So far, more than 54,800 tax relief claims have been made for people who are working from home since the beginning of October.

How much you can claim?

There are two ways you’re able to claim tax relief while working from home.

Perhaps the easiest way to claim is a picking a set of £6 a week.

You can claim £6 a week from 6 April 2020 (for previous tax years the rate is £4 a week).

If you do this, you don’t need to keep any evidence of your extra working from home costs.

The other way is to claim the exact amount of extra costs you’ve needed to pay out above the weekly amount.

If you chose to do this, you’ll need evidence such as receipts, bills or contracts.

You’ll then get tax relief at the rate you pay tax.

So, if you’re a 20% basic rate taxpayer, and claim the set £6 a week, you will get £1.20 per week in tax relief (20% of £6).

Ok, it’s not a huge amount, but it doesn’t take long to set up and the government allow you to pay less tax in this way.

Over the course of a year, you’ll get £62.40 back in tax relief.

You can also claim for any previous tax year, backdated for up to four years, and you will receive a lump sum if your claim is successful.

Read next: Running a business from home – top 5 pro tips

How to apply

You need to go through some questions on the HMRC online portal to check your eligibility, but this doesn’t take long (literally 1 minute)!

There are no complicated forms to complete, but you will need to have a Government Gateway account which you can set up online.

Don’t pay a claims company to do this for you – it’s so simple to do this yourself.

If you get a claims company or an agent to apply on your behalf, you will pay them a fee or commission, which is just not worth it.

In 2018/19, more than half a million people (around 66% of people who claimed for tax relief) applied through an agent and didn’t get 100% of their tax relief. So, just apply directly and keep every penny to yourself.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said:

“More people are getting back to office working now, but it’s not too late to apply for tax relief on household expenses if they’ve been working from home during the pandemic.

“It’s quick and easy to check if you’re eligible and apply online – go to GOV.UK and search ‘working from home tax relief”.

After you’ve been on the tax relief portal, and your application is approved, your tax code will be adjusted for the tax year. Take a look at the list of tax codes and what they mean.

The tax relief will apply directly through your salary.

You may well be able to claim even more. 

If you have work-related expenses (like cleaning a work uniform if you need to wear one), you can claim additional tax relief on that too.

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