Working from home office setup, including a laptop, mobile phone and notepad

1. What expenses can I claim as an employee when working from home?
2. What is tax relief?

3. What is the expenses flat rate for working from home?
4. What bills can I claim work expenses on?

5. How do I claim for my expenses?

6. Can I claim tax relief on work equipment?

7. Can couples that work from home both claim expenses?
8. Summary

What expenses can I claim when working from home?

August 27, 2021

As the coronavirus pandemic took the nation by storm in March 2020, many companies asked their employees to work from home until it was safe for them to return to the office, with some employers offering the chance for employees to work from home until they felt comfortable returning to the office altogether. Numbers doubled from 2019 to 2020 as people stayed home to work, with spare rooms and kitchen tables turning into workspaces and office desks.However, flexible working looks like it's here to stay. Flexible working hours are a huge bonus, as it typically means avoiding the morning and home commute, as well as a few extra hours in bed in the morning. The idea is so appealing that an impressive 48% of people in the UK have worked from home at some point in their career. There's no need to worry about the extra expenses you may incur from working at home, though. If you had to buy any office equipment in order to work from home, you are eligible to claim tax relief for the additional household expenses incurred. This means that you won't be left out of pocket if you buy things specifically for work purposes. In this guide, we'll help you uncover what business expenses you can claim on when working from home and how you can go about claiming back on these extra costs.

What expenses can I claim as an employee when working from home?

You are entitled to claim back expenses that have been specifically spent on business purposes and products. For example, you could claim money after upgrading your old computer or after you've bought a brand new office chair. Any employer contributions must be discounted from your claims because they will already have received tax relief on the items. Although you can claim for your expenses through a flat rate, in this article we'll also explain how you can calculate the specific amounts for your individual bills. Business owners can also claim for their work expenses when they're conducting business from home too.

What is tax relief?

Tax relief means that you can claim money back on items or services that you've purchased for business use. For instance, when working from a home office, you can claim back on utilities such water rates and broadband, although HMRC states that you can only claim back the part of the bill that relates to your work, not the whole amount. You can also claim back on mobile phones used to make business phone calls, irrespective of the level of private use. For more on claiming tax relief on employee mobile phones, check out our article on the subject here.

What are the requirements to claim for tax relief?

You can claim tax relief if you work at home on a regular basis, whether that's every day or a few times a week. Certain scenarios mean that you can't claim on expenses, such as not having a formal arrangement between you and your employer or days that you choose to work at home in the evenings after work. You cannot claim if you have chosen to work from home. The government website states that you can only claim tax relief if your employer has specifically told you to work from home or in the instance of needing to self-isolate due to the coronavirus pandemic. This arrangement doesn't have to be written down, but it can make it easier for both parties if it is included in your employment contract. The items you are claiming tax relief for must have been paid entirely by you. You cannot claim tax relief if your employer has purchased them on your behalf. For example, if your employer bought you a laptop to use at home, they are entitled to claim the tax relief for it.

What are the tax relief threshold rates?

Sometimes, it can be more beneficial to calculate the specific costs of working at home, especially if you think that you spend more than £6 per week. You will need to break down how much you spend on your various bills and products for work.The following is a table of the tax relief rates for employees in the tax year 2021/2022. These rates apply to England, Wales, and Northern Ireland.

Band	Taxable Income	Tax Rate
Personal Allowance	Up to £12,570	0%
Basic rate	£12,571 to £37,700	20%
Higher rate	£37,701 to £150,000	40%
Additional rate	Over £150,000	45%

The amount you are able to claim back depends on which band your income falls into. For example, if you buy something that is £100 and you are in the higher rate band, you can claim £40.If you are claiming this rather than the flat rate, you will need to provide HMRC with records of your purchases. You also have to claim within four years of the expense.Bear in mind that you cannot claim the money if your employer has already paid for the item or offered you an alternative.The tax relief rates for Scotland differ from the rest of the UK, and are listed in the table below.

Band	Taxable income	Tax rate
Personal Allowance	Up to £12,570	0%
Starter rate	£12,571 to £14,667	19%
Basic rate	£14,668 to £25,296	20%
Intermediate rate	£25,297 to £43,662	21%
Higher rate	£43,663 to £150,000	41%
Top rate	Over £150,000	46%

What is the expenses flat rate for working from home?

It can be tough to calculate how much your bills, such as heating and electricity, have increased because you work at home. To keep things simple, employers can pay you a flat rate of £6 per week. This amount will be tax-free. This contribution was set at £4 before the COVID-19 pandemic. If your employer doesn't want to give you the flat rate, then you can ask for £6 to be deducted from your taxable income. The amount you are given will vary depending on which tax band you fall into. The following is a breakdown of how much you will receive of the £6 after the tax rate has been deducted.

Basic 20% rate – £1.20 a week

Higher 40% rate – £2.40 a week

Additional 45% rate – £2.70 a week

HMRC doesn't require evidence of expenses for either method.

What bills can I claim work expenses on?

Gas

Electricity

Water

Internet access and broadband

Telephone and mobile phone

Claiming for a mobile phone

Employers can claim tax exemptions if they provide you with a mobile phone in the business's name, regardless of private use. Alternatively, the phone contract might be in your name, but your employer can reimburse you for the costs incurred.You can claim a tax deduction from HMRC if you pay for your work phone and your employer doesn't reimburse you. You can find out more on the matter by reading our Employee Mobile Phone article.

How do I claim for my expenses?

Claiming for tax relief is quick and easy to do. You can fill out a short questionnaire on the HMRC website to see how much you are eligible to claim. The amount you can claim is based on which tax band your income falls into. You can also claim for expenses via post or the phone. If you are a sole trader or work in a partnership, you will have to claim a tax return through Self Assessment tax return. You can find out more information on this via the HMRC website. The way you claim your expenses will depend on your situation and what you are claiming for. Some expenses can only be claimed through the post, whilst others can also be claimed online and over the phone.

Claim online

You can claim online via the HMRC website. The form is easy to use and features multiple options so that you can make sure you can find the right information for your claim. The questions will ask about your personal work situation and what expenses you are trying to claim. HMRC requests that you provide records of what you've spent on bills such as lighting, telephone bills and heating. You won't need to provide evidence for expenses such as uniform cleaning. You'll need to have your Government Gateway ID and password to log in. To create a Government Gateway ID, you will need your National Insurance number and a recent payslip. You will also need a P60, recent payslip or valid UK passport to process your claim. The expenses can all be submitted at once and then the tax relief you are due can be calculated from the total amount. You can claim for up to five different jobs and multiple tax years.

Claim via post

Unfortunately, you cannot claim online for more than five jobs or on behalf of someone else. Instead, you will need to fill out the HMRC form and then print it. Your claim must be for under £2,500, otherwise, you will have to claim through Self Assessment.

Claim by phone

You can only claim for work expenses over the phone if you have previously claimed in other tax years. Your total expenses must also be less than £1,000 or less than £2,500 if you are claiming professional fees and subscriptions.

Can I claim tax relief on work equipment?

You can claim for tax relief on equipment using the flat rate method or by calculating the individual costs of each item and bill. Your company might reimburse you for products straight away as they can claim for 'substantial equipment' and be reimbursed for the full amount. Work items that qualify as substantial equipment are eligible for a capital allowance called annual investment allowances. This scheme is aimed at businesses and means that they can deduct the product from the company's profits before they pay tax. Things you can claim expenses on include items such as laptops, office furniture and stationery. The items that you claim tax relief on cannot be intended for any personal use. You can also claim for items such as uniforms and tools, as well as repairs, maintenance and replacement. The initial expense of buying small tools or home clothes, however, is not covered.

Claiming for uniform and small tools

You can claim tax relief if you have to pay to have your uniform cleaned, although it's important to note that the uniform has to be clothing that must be worn to carry out the job role. For example, you could claim if you are cleaning a nurse's uniform but not if you are cleaning a suit.You can also claim for the repair and replacement of small tools, such as a spanner for a mechanic or scissors for a hairdresser. To prove these purchases, you'll need to keep the receipts for any items purchased.You will need to reduce the amount you claim tax relief on if your employer helps to pay for the item. Alternatively, your employer may have a flat rate scheme in place. In this instance, you can claim a flat rate each tax year for expenses such as uniforms, clothing, and tools, and you won't need to keep records and receipts for the tax you're claiming back on.

Can couples that work from home both claim expenses?

Everyone in a household who works from home can claim individual tax relief if it's evident in your bills that you're taking on additional costs due to working from home. You and the people that you live with will need to process your claims separately. If you're struggling to figure out which expenses you can claim on, contact HMRC or speak to one of our accountants for advice.

Summary

With more employers and companies looking to move to hybrid working in the future, it's increasingly important to know your rights in terms of claiming expenses.

Fred PrincewillJunior Accountant

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