By senior accountant Tom Lowry

Following the national lockdown announced by the Prime Minister on Monday 4th January, it is important to understand the tax relief and financial support available to you as a UK taxpayer.

If you are one of the many millions of people working from home, it is highly likely that you’ve seen an increase in your household costs as a result. If you have been forced to work from home due to Covid-19, you may be able to claim for these additional household costs. However, if you choose to work from home, you cannot claim the tax relief. Additionally, you can only claim the tax relief if you have paid tax in the tax year in question and your employer has not reimbursed you for these increased costs.

Additional household costs include the variable costs of your household, such as heating, water bills, home contents insurance, business telephone calls etc. Costs that are fixed and do not change regardless of whether you are working from home or not, such as council tax, mortgage interest or rent are not included in the tax relief available.

There are two different ways of claiming this tax relief. You can either claim HMRC’s flat rate, or you can calculate the actual additional expenditure.

The first method is to make the claim using HMRC’s flat rate. For the tax year ending 5 April 2021 this amount is £6 per week (£312 for the year). HMRC has confirmed that this will return to £4 per week after this tax year has ended. The main advantage of this method is that you will not need to keep any evidence of the additional household costs incurred, you simply make the claim and that is all. For a basic rate taxpayer, the tax saving on this £312 equates to £62.40 (£312 x 20%). If you are a higher rate taxpayer, you would save £124.80 (£312 x 40%).

HMRC has recently confirmed that if you’ve worked at least one day from home this tax year you can claim the £6 per week for the full year. This applies to the period 6 April 2020 to 5 April 2021 and will revert to £4 per week after this tax year has ended. To make this claim, you will need a Government Gateway ID. If you do not have one of these, the process of registering for one takes around 10 minutes – you will most likely need your NI number and a recent payslip or P60. Click here for the link to claim this tax relief.

 If you are self-employed and currently file a self-assessment tax return each year, you can claim the tax relief for working from home when completing your return. You would include it within the expenses section of your self-employment details.

The other method for claiming tax relief for the additional household costs of being forced to work from home is to claim the actual increased expenditure. To do this, you will need to keep evidence of the increases, such as receipts, bills, or contracts.

If you are an employee claiming this tax relief, you should not expect to receive a cheque from HMRC for the amount of tax saved. It will be added to your tax code, which should be shown on your payslip. This tax is then returned to you over the remaining months of the tax year by way of a lower tax deduction from your monthly pay.

If you have any questions or uncertainties over making a claim, please do not hesitate to email Tom Lowry at who would be happy to go through the process with you in more detail.