Working from home? How to save £125 by claiming tax relief

Martin Lewis discusses working from home tax relief

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According to HMRC, around 800,000 employees who have been working from home during the pandemic, have already claimed tax relief on household related costs This saving is worth £125 a year for each employee and can go towards various costs which affect their ability to work their job from home. Eligible workers can claim the full year’s entitlement if they have been told to work from home by their employer.

A full year’s entitlement can even be claimed if the employee has only worked for only one day during the tax year.

However, WFH tax relief is not just available for people who are still stuck in their bedroom and home offices working away.

Workers who have either returned to the office since early April or are preparing for their return can still claim the working from home tax relief.

Getting this benefit could potentially give employees a £125 cash boost from the full year’s relief for the 2021 to 2022 tax year.

Myrtle Lloyd, HMRC’s Director General for Customer Services, outlined why and how employees can get a hold of this worker support.

She explained: “More people are getting back to the 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’”.

Those looking to access the support can start their application directly through HMRC’s online portal.

After their application has been approved, their tax code will be automatically changed for the 2021 to 2022 tax year.

This means employees will directly receive the tax relief when their employers pay them their salary.

It should be noted that agents can not apply for WFH tax relief on behalf of one of their customers.

As of April 2020, the largest amount an employer could pay their workers tax-free without employees having to provide evidence of an increased bill was placed at £6 a week.

Any workers who have not received working from home expenses from their employee are encouraged to apply to receive the tax relief from HMRC.

How is the tax relief calculated?

Those receiving WFH tax relief can receive the support on the rate at which they pay tax.

On its website, HMRC uses the example of an employed worker paying the 20 percent basic rate of tax and claiming tax relief on £6 a week.

Under these circumstances, the worker would receive £1.20 a week in tax relief, which is 20 percent of £6 a week, towards their household bills.

Taxpayers who pay a higher rate would receive £2.40 a week, which is 40 percent of £6 a week.

Over the full year, customers would reduce the tax they pay by £62.40 or £124.80 under both these tax brackets.

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