It is understood that from 6 April 2020, HMRC has increased the flat-rate allowance by 50% i.e. from £4.00 to £6.00 per week. This was a kind gesture from HMRC to allow employees to cover the additional costs incurred from working from home (especially electricity and heat) as we’ve all been doing since the start of the pandemic crisis to limit the rate of transmission and to keep the R-value below 1.
This practice has been in existence since April 2011 but not many employees make use of this opportunity. However, a change in practice now means that employers will be able to pay a tax-free allowance of up £26.00 per month under the home working arrangement.
Helen Thornley provides a detailed explanation of how this homeworking allowance is given under ITEPA 2003 in her guide to tax reliefs to support homeworking and Rebecca Cave further shed light on employee rights to this allowance in her article “Home workers can claim £6 per week” where an employee working from home isn’t paid by the employer.
The good news about this change in practice by HMRC on the 6th of April 2020 is that employees do not have to keep records or provide any documental evidence(s) to their employers of the extra expenses incurred as a result of working from home BUT not more than the flat-rate allowance must be paid by the employers.
This was supported in HMRC employment income manual which gave the guidance that for ease of administration, HMRC will accept that employees who can claim the flat rate allowance without having to justify the amount claim. This means no more time-wasting in calculating additional household costs or keeping records as long as the four conditions in EIM32820 are met.
You can proceed to check your eligibility here (if you haven’t been received this allowance by your employer) before making your claim online or through the post using Form P87.