Millions of people who have spent the past few months working at kitchen tables are encouraged to apply for a tax credit using an online form that can return them up to £ 125.
At the start of October, HM Revenue and Customs (HMRC) launched an online portal that offers employees a hassle-free way to claim exemptions without having to provide receipts or make complicated calculations.
The government said this week that fewer than 55,000 people have applied online so far, indicating that millions of others who have been asked to work at home can still file a claim.
Tax relief is offered to workers on the condition that they are told by their employer, rather than choosing, to work from home – provided they have not received home payments directly from their company.
“We want everyone to have the money they are entitled to, so we made the online service as easy to use as possible – it only takes a few minutes to file a claim,” says HMRC’s interim general manager of customer services, Karl Khan.
He says that once the application is approved, the portal will amend the tax code for the individual for the tax year 2020-21. The employee will receive tax credit directly through their salary and will continue to receive the adjustment until March 2021.
What is its value?
If you choose the easy route that does not require receipts, your claim will be based on the assumption that you incurred costs of £ 6 per week while working from home and would be refunded the tax you would have paid for that total. For base rate taxpayers – those earning between £ 12,500 and £ 50,000 a year – the exemption value is 20% of £ 6: £ 1.20 per week can payers with higher rates (those earning more than £ 50,000 Claim 40% or £ 2.40 per week.
If you finish working the entire tax year at home – from April 6, 2020 onwards, you’ll be able to reduce your tax bill for next year by £ 62.40 or £ 124.80, respectively. Many people may want to file a claim when they return to work, or if the worst happens at the end of the tax year next April.
The advantage of taking this route is that it is easy to apply and you don’t have to search for any paperwork. If you work at home four days a week and still go to the office on the fifth day, you can apply as if you were just working at home. Do not get a cash payment; Simply put, your salary package will increase a little because you pay a little less tax.
What if my bills are much higher?
If the above sums don’t come close to the additional expenses you incurred, you can apply for a waiver for the higher sums – though the matter is more complicated, says Susan Briggs, partner at tax accounting firm Blick Rothenberg.
“Employees who incurred much higher costs have two options,” she says. “Those who complete the Self-Assessment Form each year simply add the claim to it. If you’re lucky enough not to have to fill out an annual return, HMRC has a form – The P87 Employees are allowed to claim reserve expenses up to a maximum of £ 2,500.
You will need your employer’s name, PAYE reference (which you can find on your payment receipt or P60) and your job title.
The HMRC website says the additional costs include things like “heating, metered water bills, home contents insurance, business calls or a new broadband connection.” It does not include costs that will remain the same whether you work at home or in an office, such as mortgage interest, rent, or council tax.
In fact, Briggs says, employees can only claim additional heating and electricity costs for the proportion of the house they occupy while working at home, or things like phone calls made for work reasons.
It says most workers will not be able to claim the cost of broadband because HMRC assumes that households will get this anyway. However, you can record the cost of having to buy a laptop, or an office chair that you only use for business purposes.
Again, you won’t get the full cost back for the extra expenses, just the tax credit from the total. So if, as a base rate taxpayer, you can show £ 500 in additional costs, you’ll see your net wages increase by 20% or £ 100 – or £ 200 for higher-rate taxpayers.
“Be aware that you will have to prove these additional costs and support them with receipts. Most people will likely decide that a non-receipt claim of £ 6 per week is the easiest option.”