What is the working from home tax relief scheme?
The work from home tax relief scheme was introduced in 2003 to allow workers to reclaim some of the extra expenses that are often incurred while working from home, such as increased energy bills.
This allowance is intended for employees whose employer does not cover these extra costs, either partially or entirely. For example, if your employer only partially covers your working from home expenses, you may be able to claim the difference from HMRC. Workers whose employers fully cover their costs are not eligible to submit a claim.
Initially set at £4 a week (tax-free), this allowance was increased to £6 a week in 2020 as the pandemic resulted in a significant increase in the number of people who needed to work from home.
Following the lifting of restrictions, the government revised the requirements for the 2022–23 tax year, introducing new rules which mean many are now no longer eligible to receive tax relief under the scheme.
Who's eligible to claim tax relief when working from home?
Tax relief is available to both employees and the self employed, but there are different rules and avenues for receiving this relief depending on whether you're an employee, sole trader or limited company director.
If you're an employee, you're only eligible to claim tax relief if you have to work from home due to the nature of your employment, for example:
If your employer does not have an office space
If you live far away from your office and a daily commute there would not be possible or reasonable
You're not eligible for relief if you're working from home as a preference, or for convenience to you or your employer. For example, you cannot claim relief if:
Your employment contract allows you to work from home either some or all of the time
Your employer provides an office space, but you're unable to work there sometimes because it's full
What work from home expenses can you claim tax relief on?
Work from home tax relief if you’re employed
The work from home tax relief scheme aims to help employees cover additional costs they might incur that are directly related to carrying out their work from home.
This includes things like:
Business phone calls
Additional lighting, heating or water costs
Cleaning costs (for your working area)
Office supplies, such as stationary
You're not able to claim relief for any expenses that are incurred for both work and personal use. This means that expenses such as rent or broadband use are not typically covered. However, if you either didn't have home broadband before you began working from home, or if you can prove an increase in usage due to your work, you may still be able to claim for these internet expenses.
HMRC provides guidance on claiming tax relief on your working from home expenses, as well as a tool that will tell you whether you're eligible and how to claim.
Work from home tax relief if you’re self employed
On the other hand, if you're self employed, the rules are slightly different. Several of the expenses you can claim if you’re self employed relate to working from home, such as:
Phone and internet bills
Stationary
Printing costs (including ink and cartridges)
Computer software
You're also able to receive tax relief on using your home as an office, but only the part of your home that's used for business purposes.
You're able to claim a percentage of your household bills - the calculation is based on the total usable number of rooms in your home which includes:
Rent or mortgage interest
Water, gas and electricity
Home insurance
Cleaning
Repairs
For clarification of what's allowable, HMRC provide guidance on office, property and equipment related expenses.
How much tax relief can I claim for working from home?
The current work from home tax relief rate is £6 a week, or you can claim tax relief on the exact amount you’ve spent.
The amount of tax relief you receive will then depend on your tax bracket. As an example, a higher rate tax payer would receive 40% of the £6 allowance, totalling £2.40 per week, while a basic rate tax payer receives 20%, which comes to £1.20 per week.
How to claim tax relief for working from home
How you claim tax relief will depend on whether you're employed or self employed, and how you usually inform HMRC of your tax liability.
Employees can claim this payment in 2 ways:
Directly from HMRC with an online form
Your employer can pay it through your salary
To claim tax relief directly with HMRC, head to their online portal. You’ll first need to answer a few questions to ensure you’re eligible, before logging into your Government Gateway account with your user ID and password to submit your claim.
You can claim for this tax year as well as the previous 4 tax years, and you'll need to provide evidence such as copies of receipts or bills.
If you pay your tax via self assessment every year, you'll need to submit your claim as part of your usual self assessment tax return.
💡If you're the director of a limited company, some of the expenses incurred will be paid for directly from your company’s business bank account, lowering your corporation tax liability.
What changes did HMRC make to the work from home tax relief rules in 2023?
Prior to 2023, employees were able to claim the tax allowance relief if they were required by their employer to work from home, even if only briefly.
However, as Covid-related restrictions were lifted, the government revised the rules, making it harder for those who work from home by choice to access this relief.
The revised rules mean that you cannot claim tax relief if your contract allows you to work from home some or all of the time, or if you're working from home due to your employer’s office being full or unavailable.
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