We continue to see the popularity of hybrid working and many more people are working from home regularly in the post lockdown era, whereas pre 2020 this may not have been an option. This might lead to a small but worthwhile tax saving opportunity.

If you work from home under ‘homeworking arrangements’, it is possible to receive a payment from your employer tax free. This arrangement means you are regularly performing some or all of your duties at home.

HMRC guidance notes that they will accept an employee is working at home regularly where it is frequent or follows a pattern. However, note that informal working from home, such as working in the evenings after a day in the office, does not count. It is good practice to have something formal in writing.

The reimbursement can be calculated in a few different ways, giving a payment which is free from Income Tax and NIC.

If your employer does not wish to reimburse any costs, it is possible to claim tax relief yourself by deducting expenses from your employment income. However, the conditions which surround this are more restrictive; the costs must be incurred ‘wholly, exclusively and necessarily’ for the employee’s work. There is detailed guidance within HMRC manuals as to what this means. What is important to note is that, where an employee chooses to work from home, relief for additional costs is highly unlikely to be available.

If you are an employee (or an employer thinking about how best to reward your staff), get in touch!