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Working from home can involve additional expenses. Kay Hill looks at your options for getting some of that money back.

Whether you can claim tax relief depends on why you are working from home. Normally, if you are an employee and an office place is provided for you, but you choose for your own convenience to work from home, you cannot claim tax relief on those costs (in the same way as you can’t claim tax relief on your normal travelling costs to get to work).

However, if your employer asks you to work from home, perhaps because your workplace is closed, or you are self-isolating or shielding, then you can claim back additional costs such as business telephone calls, additional insurance, a necessary broadband upgrade, or the extra cost of gas, electricity and metered water (but not things you were paying for anyway, like your rent or regular broadband).

You can work out all these costs out, keep the proof and records, and then your employer can refund them to you without you paying tax on it. Or, to make things simpler, your employer can pay you up to £6 a week (£26 a month) tax-free to cover your additional costs (last tax year it was £4 a week/£18 a month). If you choose the allowance, you don’t have to keep records or proof.

You can work out all these costs out, keep the proof and records, and then your employer can refund them to you without you paying tax on it. You can work out all these costs out, keep the proof and records, and then your employer can refund them to you without you paying tax on it.

If your employer is unwilling, or unable, to pay the costs or allowance directly to you then you can claim it as a tax relief from HMRC – through an annual tax return or a P87 form by post or online through Government Gateway. Bear in mind that if you need new capital equipment, like a desk, chair or computer, your employer should pay for them directly, as if you pay and are then reimbursed, the payment will be taxed.

If you are self-employed and work 25 hours or more a month from home, you can also choose between claiming actual expenses (with record-keeping and proof) or an allowance. This is £26 a month if you work more than 101 hours a month at home, sliding to £10 a month if you work 25-50 hours a month at home. You can claim actual phone and broadband costs on top (you can proportion your broadband or unlimited phone tariff according to the amount used for business use versus private use).

You can also claim the costs of buying office equipment as part of your annual investment allowance. However, if you use the £1,000 annual trading allowance instead of traditional accounting, this takes the place of claiming all other expenses.

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