Working from home tax relief: How to claim up to £125 tax back due to Covid

MILLIONS of people working from home because of the coronavirus pandemic are missing out on extra cash.

Nearly one million workers have claimed tax back this year and it's worth as much as £125.

But as many as three million could be eligible, meaning many Brits are missing out on the free cash.

Workers can claim up to £125 tax back this year if they have had to work from home because of the coronavirus pandemic – even if it's just for a single day.

Claims can also be made for the previous tax year, also worth up to £125.

Around three million people have already made a claim for the 2020-21 tax year, and HMRC says just 800,000 have claimed for this year so far (2021-22).

What can I claim tax relief on?

THERE are certain things that you can claim tax on under HMRC rules. They include the following:

  • Expenses for working from home
  • Repairing or replacing small tools needed to do their job (for example, scissors or an electric drill)
  • Cleaning, repairing or replacing specialist clothing (for example, a branded uniform or safety boots)
  • Business mileage (not commuting)
  • Travel and overnight expenses
  • Professional fees and subscriptions

Anyone who's eligible for both years and hasn't yet claimed can get £250.

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

Claims for last year are paid as a lump sum in your salary.

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

HMRC accepts claims throughout the whole tax year and you can make backdated claims up to four years.

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?

Martin Lewis has urged people working from home, even if for one day only, to claim the tax back.

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

This doesn't apply if it's something you've decided on your own whim.

To be eligible, you will also have to have had higher costs because of working from home.

If you've had the lights or heating on when working from home, this will generally count as an increased cost (if you were at work in the office, you would not have been using them).

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?

This is a little bit complicated, but essentially your employer can effectively pay you £6 a week extra tax-free to cover expenses.

But with many firms struggling right now, 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.

What you’ll need to make a working from home tax claim

YOU’LL need the following basic information to hand before you make tax claim via HMRC:

  • 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.

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.

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.

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