Working From Home Tax Relief Claim

The key distinction HMRC draws is between employees who are required to work from home and those who choose to do so. The requirement may come from the employer's policy, the nature of the job, or the lack of an available workplace. If eligible, the simplest method is to claim the flat rate allowance of GBP 6 per week (GBP 312 per year), which can be claimed through HMRC's online portal or by submitting a P87 form. For those with higher costs, it is possible to claim the actual additional costs of working from home, such as the proportion of heating, electricity, and broadband used for work. This method requires records of the costs incurred. Claims can generally be made for the current tax year and up to four previous tax years.

Common situations include: an employee whose contract requires them to work from home, someone who works from home because their employer does not provide office space, an employee who splits their time between home and an office, someone who claimed during the pandemic period and wants to know if they can still claim, and a self-employed person wanting to claim home-as-office expenses.

The legal basis for employed persons is Section 336 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA), which allows deductions for expenses incurred wholly, exclusively, and necessarily in the performance of duties. Section 316A of ITEPA provides for the flat rate deduction for working from home. For self-employed individuals, the rules differ: expenses may be claimed under the trading income provisions of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA), and HMRC permits simplified expenses using flat rates based on hours worked from home per month. HMRC's Employment Income Manual (EIM32760) provides detailed guidance on the conditions for claiming.

People considering a working from home tax relief claim often explore whether their arrangement qualifies as a requirement or a choice, whether the flat rate or actual cost method is more beneficial, whether they can claim for previous tax years they may have missed, and whether their employer could pay the allowance directly tax-free instead. Some people check whether their employer already reimburses home working costs, as claiming tax relief for expenses already reimbursed is not permitted. Self-employed individuals often consider using HMRC's simplified expenses method for home office costs.

Common mistakes include: claiming when working from home is a personal choice rather than an employer requirement, not realising that the flat rate has changed over time and checking the current amount, claiming for the full cost of broadband or heating rather than the additional proportion attributable to work, not keeping adequate records when claiming actual costs, and not being aware that claims can be made for previous tax years.