Hundreds of thousands of employees, who have been working from home during the pandemic, have put in tax relief claims that could amount to a saving of around £125 a year.

Since April, almost 800,000 workers have claimed tax relief on household related costs, HM Revenue & Customs (HMRC) has revealed.

The saving is for each employee, and employees can claim the full year’s entitlement if they have been told to work from home by their employer – even if it has been for one day during the tax year.

Those employees who have either returned to working in an office since early April or are preparing for their return can still claim the working from home tax relief and benefit from the full year’s relief for 2021/22.

How do employees claim?

It is a fairly simple task to claim via HMRC’s online portal. Employees can apply directly themselves and receive the full tax relief that is due. Therefore, it is important for employers to encourage their employees to apply, especially if workers have been at home for a long period of time.

Once their application has been approved, their tax code will be adjusted for the 2021/22 tax year, receiving the tax relief directly through their salary.

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.

“It’s quick and easy to check if you’re eligible and apply online – go to GOV.UK and search ‘working from home tax relief’.”

Since April last year, the maximum amount employers have been able to pay tax-free without employees having to provide evidence of an increased bill was set at £6 a week. However, employees who have not received the working from home expenses payment direct from their employer can apply to receive the tax relief from HMRC.

How much tax relief could employees receive?

Eligible employees can claim tax relief based on the rate at which they pay tax.

For example, if an employed worker pays the 20 per cent basic rate of tax and claims tax relief on £6 a week, they would receive £1.20 a week in tax relief (20 per cent of £6 a week) towards the cost of their household bills.

Higher rate taxpayers would receive £2.40 a week (40 per cent of £6 a week). Over the course of the year, this means customers can reduce the tax they pay by £62.40 or £124.80 respectively. Tax rates will differ in Scotland.

If employees were required to work from home in the 2020/21 tax year but did not claim for the tax relief, they have not missed out; HMRC will accept backdated claims for up to four years. They will receive a lump sum payment for any successful backdated claims.

HR Caddy provides support to organisations covering all areas of Human Resource management.

While this tax relief is not a benefit directly offered by businesses, employers should support those working from home to access this scheme to show they are committed to helping staff.

For more help and advice on how businesses can help employees with homeworking, please contact us today.