Work-from-home allowance: the options (updated April 2021)

Tax-free payment to your employees

If, due to the continuing pandemic and restrictions placed upon us, you have employees working from home, you are able to pay them by virtue of HMRC regulations £6 per week as a non-taxable expense.

Employees tax allowance

If you haven’t paid your employees the tax free working from home £6 per week allowance, they can go online and make a claim for the working from home tax allowance. Employees can claim the full annual allowance of £312 (£6 x 52 weeks) as a deduction against their earnings even if they are only required to work from home for part of the year. The claim will result in a tax reduction for a basic rate tax payer in the current year 2021/22 of £62.40 (£6 x 52 = £312 x 20%) equal to £1.20 per week. 

Your employees will need a government gateway user ID and password. If they do not have one then they will need their national insurance number and a recent payslip or P60 or a valid UK passport to set one up.

The link to make the claim is https://www.gov.uk/tax-relief-for-employees

For those employees who qualify to claim for tax year 2020/21 but did not make a claim they are able to make a claim using the online facility. The claim will result in a tax refund for 2020/21 of £62.40 (£6 x 52 weeks = £312 x 20%). Employees who complete a self- assessment return should make a claim for 2020/21 when completing the tax return.