Life’s expenses tend to pile up, especially when we’re working from home. But did you know there’s a way to alleviate some of the financial burden?
That’s right, by claiming your tax rebate for working from home. In this article, we’ll guide you through the process of claiming tax relief on home working expenses and potentially putting money back in your pocket.
So, if you’re part of the work-from-home crowd looking to save money, keep reading!
Who Can Claim a Tax Rebate for Working from Home
Not everyone who works from home is eligible for tax relief. To claim tax relief, you must be required to work from home, such as:
- Your job requires you to live far away from your office.
- Your employer does not have an office.
You cannot claim tax relief if you choose to work from home, including:
- Your employment contract allows you to work from home some or all of the time.
- You work from home because of COVID-19.
- Your employer has an office, but you cannot go there sometimes because it’s full.
What You Can Claim For
You can only claim tax relief for expenses directly related to your work, such as:
- Business phone calls.
- Gas and electricity for your work area.
You cannot claim tax relief for items you use for both private and business use, such as rent or broadband access.
How Much You Can Claim
There are two ways to claim tax relief on your home working expenses:
- Claim tax relief on £6 a week from 6 April 2020 (£4 a week for previous tax years) – you won’t need to keep evidence of your extra costs.
- Claim tax relief on the exact amount of extra costs you’ve incurred above the weekly amount – you’ll need evidence such as receipts, bills, or contracts.
You’ll receive tax relief based on the rate at which you pay tax. For example, if you pay the 20% basic rate of tax and claim tax relief on £6 a week, you’d get £1.20 per week in tax relief (20% of £6).
Tax relief is usually granted through a change to your tax code.
Changes in Eligibility Due to COVID-19
It’s important to note that if you previously claimed tax relief when you worked from home due to the COVID-19 pandemic, you might no longer be eligible. As circumstances change and more people return to their offices, eligibility criteria may be updated. Be sure to review the latest guidelines from HMRC to determine your eligibility for claiming tax relief for working from home.
How to Claim Your Tax Relief for Working from Home
When you’re ready to claim your tax relief for working from home, you can do so through the HMRC website or on a paper P87 form. To make the process even smoother, consider using the services of a reputable accounting firm like Countplus Accounting. Their Self Assessment tax return service can guide you through the entire process, ensuring you receive the maximum amount of tax relief possible.
Keeping Records and Receipts
To maximize the tax relief you can claim, it’s essential to keep accurate records and receipts of your work-related expenses. This includes documentation for items such as business phone calls, electricity and gas usage for your work area, and any other expenses directly related to your work. If you choose to claim tax relief on the exact amount of extra costs you’ve incurred above the weekly amount, you’ll need this evidence to support your claim.
Understanding the Tax Relief Process
Claiming tax relief for working from home may seem daunting, but understanding the process can help ease your concerns. Here are the general steps you’ll need to follow:
- Determine your eligibility: Review the criteria mentioned earlier to see if you’re eligible for tax relief for working from home.
- Gather documentation: Collect receipts, bills, and contracts that support the expenses you’re claiming.
- Choose a method to claim: Decide whether to claim tax relief on a fixed weekly amount or the exact amount of extra costs incurred.
- Submit your claim: You can claim your tax relief through self-assessment tax returns, online via the HMRC website, or by using a paper P87 form.
- Wait for a response: HMRC will review your claim and, if approved, adjust your tax code accordingly to grant you the tax relief.
Remember, working with a professional accounting firm like Countplus Accounting can streamline the process and ensure you get the most out of your tax relief claim.
The Impact of Tax Relief on Your Finances
Claiming tax relief for working from home can have a significant impact on your financial situation. Not only will you potentially receive money back for work-related expenses, but you’ll also have more funds available for other essential aspects of your life.
This financial boost can help you manage your household costs, save for future investments, or simply enjoy a little more financial freedom.
Don’t Miss Out on Your Tax Rebate for Working from Home
There you have it—a comprehensive guide to claiming your tax rebate for working from home. By understanding who’s eligible, what expenses you can claim, and how much you can claim, you’re now better equipped to navigate the process and save money.
Don’t forget, you don’t have to navigate the world of tax relief alone. Countplus Accounting’s expertise in various sectors, such as not-for-profit, property investment, restaurants and hotels, technology, healthcare professionals, online businesses, start-ups, and construction and motor industries, makes them a reliable partner in your financial journey.
Let us help you get the most out of your tax rebate and put money back in your pocket today.