Work from home tax relief: How to claim up to £500 tax back due to Covid

YOU can still claim up to £500 in tax back if you've had to work from home during the coronavirus pandemic.

The latest government advice is to work from home if you can, and if you do you could reclaim cash spent on household expenses.

From today, the official guidance is that employees should return to remote working in order to slow the spread of the new Covid variant.

That means you could be able to claim more tax back to cover household expenditure.

You can claim up to £125 per year and with the option to backdate claims by up to four years, this means you could claim up to £500 in total.

HM Revenue and Customs (HMRC) revealed that 800,000 of Brits claimed the money to cover household related costs between April and June.

It's available to claim if you have been told to work from home by your employer, even for just one day.

That means you can still claim money back if you're hybrid working and going into the office sometimes.

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Myrtle Lloyd, HMRC’s Director General for customer services, said: "More people are getting back to office working now, but it’s not too late to apply for tax relief on household expenses if they’ve been working from home during the pandemic."

What is Work from Home Tax Relief?

You can get up to £125 per year in tax back, but as many as three million could be eligible, meaning many Brits are missing out on the free cash.

Claims can also be made for the previous tax year, also worth up to £125, so anyone who's eligible for both years and hasn't yet claimed can get £250.

HMRC will, in fact, accept backdated claims for up to four years which means in total you could claim up to £500.

Under the scheme, your tax code is adjusted so you're not paying as much tax.

Claims for last year are paid as one lump sum in your salary while ongoing claims for this year will be factored into your monthly wage.

The scheme is designed to help people cover the extra costs of working from home, like energy bills and internet connections.

The government has created a handy online tool to help you get the working from home tax back.

The online service is easy to use and takes just a few minutes to make a claim.

Who is eligible?

If you have worked from home, even if for just one day, you can claim the tax back.

The crucial point is, however, that your employer must have required or asked you to work from home for you to be able to claim.

This doesn't apply if it's something you've decided yourself.

To be eligible, you will also have to have seen your household costs rise because of working from home.

This could be because you've had the lights or heating on more because you're inside for longer, or you've used more internet than usual.

Generally the bills will count as an increased cost, as if you were at work in the office, you would not have been using them regularly.

But you won't be able to claim the tax back if your employer is covering your working from home expenses already.

You also can't claim if you're self-employed – since you work for yourself you can claim expenses on your tax return.

How much can I claim?

Your employer can effectively pay you £6 a week extra tax-free to cover expenses.

But it's more likely you'll instead claim tax relief on this £6 a week.

If you claim the tax relief, the exact reduction to your tax bill depends on your tax rate and it's the highest rate of tax you pay that's used.

For those paying the standard tax rate of 20%, you would get £1.20 a week in tax relief.

While for people who pay tax at the higher rate of 40%, you'd get £2.40 a week.

Additional rate tax payers who pay 45% will get £2.70 a week.

So claim for the entire tax year, that's tax relief of £62.40 for basic rate taxpayers, £124.80 for higher rate tax payers, and £140.40 for additional rate tax payers.

How do I claim the cash?

HMRC has an online tool to help you submit a claim for both tax years.

Once the application has been approved, your tax code for the 2021 to 2022 tax year will be adjusted automatically.

You will then see the tax relief directly through your salary, and will continue to receive the adjustment until April 5, 2022.

You won't get a one off payment when claiming for this year, instead it will be included as part of your weekly or monthly payments from your employer.

But for claims for last year, you'll get he money as a lump sum through your salary.

You'll need several documents to hand in order to claim tax back.

That includes:

  • Something to prove your identity – this could be a passport, driving licence, or you can answer various questions based on your credit file
  • A P60 or recent payslip
  • National insurance number
  • Your Government Gateway user ID and password or you can create a user ID if you do not already have one.

If you’re looking for ways to give your salary a bit of a boost, there are lots of easy and simple ways you can make £100s extra a month and we have 12 ways you could get a head start.

Here's how to see if you've overpaid tax and claim a rebate.

Plus there are ways to get free travel and childcare if you're hunting for a job while on Universal Credit.

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