With many employees currently working from home, there have been two welcome concessions for HMRC regarding the tax treatment of expenses.
- Personal purchases of equipment to be used for work purposes.
- Tax relief on homeworking expenses.
Personal purchases of equipment
Usually, the purchase of equipment such as monitors, printers, desks, etc personally by an employee and later reimbursed by the company would lead to a tax bill for the employee.
The new rules introduced allow a temporary concession for the tax year to 5th April 2021 (and also by discretion from 16th March 2020 to 5th April 2020.)
In order to qualify, there are two condition that have to be met:
- The equipment was purchased for the sole purpose of enabling homeworking as a result of Covid-19 restrictions.
- The equipment purchases would have been tax exempt if provided directly by the employer.
Companies are allowed to pay their employees a tax-free homeworking allowance of up to £6 a week or £26 month from 6th April 2020 (£4 a week before 5th April 2020.)
This is to cover additional homeworking expenses, such as heat and light.
While previously the fixed-rate tax relief was only available on employer payments, from 15th May it is now possible for employees to claim themselves if the company isn’t making payments to them.
Employees can now claim £6 a week/£26 a month in their 2021 tax returns for periods where they were required to work from home but were not paid a homeworking amount by their employer. In addition, the cost of non-reimbursed business telephone calls can be claimed on top.
The weekly amount is a fixed-rate deduction and no receipts are required to be kept for this. Records of business telephone call costs should be kept.