HMRC has issued a new warning to millions of people who work from home that a five minute check could help them avoid a costly repayment bill.
Workers should double check they are eligible for tax relief when working from home before they make a claim to avoid being hit with a bill.
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Many remote workers can legitimately claim tax relief for essential household costs such as heating and business-related phone calls when working from home.
They can either claim on a flat rate of £6 a week or the exact amount of additional expenses they have incurred.
But HMRC has said that strict eligibility rules mean individuals are responsible for repaying any money if they incorrectly claim the relief.
This is also the case if they use a company that promises to claim the tax relief on their behalf.
In a fresh alert on social media HMRC warned: “Don’t get caught out by ads promising quick tax refunds for working from home.
“Always check if you are eligible before making a claim. Avoid agent fees by claiming directly with HMRC.”
Who can claim tax relief?
You may be able to claim tax relief for additional household costs if you have to work from home for all or part of the week.
But it is only available in specific circumstances, such as if an employer requires an employee to work remotely, or if there is no office available.
Choosing to work from home does not qualify you for tax relief.
You are also not eligible if your employer has an office but you cannot use it sometimes because it is full.
Meanwhile, if you claim for the exact additional expenses then they must relate directly to work costs, such as business calls or a proportion of your electricity bill.
You cannot claim for general household costs such as rent or broadband.
You can either claim tax relief on £6 a week or the exact amount you have spent.
You will get the relief based on the rate at which you pay tax.
How do I check my tax code?
YOU can check your tax code on your personal tax account online, on any payslips or on the HMRC app.
To log in, visit www.gov.uk/personal-tax-account.
If you have one, you can also check it on a “Tax Code Notice” letter from HMRC.
Bear in mind that you might need your Government Gateway ID and password to hand to log in.
But if you don’t have this you can use your National Insurance number or postcode and two of the following:
- A valid UK passport
- A UK photocard driving licence issued by the DVLA (or DVA in Northern Ireland)
- A payslip from the last three months or a P60 from your employer for the last tax year
- Details of a tax credit claim if you have made one
- Details from a self assessment tax return (in the last two years) if you made one
- Information held on your credit record if you have one (such as loans, credit cards or mortgages)
For example, if you pay the 20% basic rate of tax and claim relief on £6 a week, you would get £1.20 a week in tax relief.
Andy Wood, international tax adviser at Tax Natives, explains: “The criteria for claiming this relief changed following the COVID-19 pandemic.
“Many people who were eligible during the pandemic may no longer qualify today, so it’s important not to assume continued entitlement without checking.”
He adds that even if they use an agent or tax refund company to submit a claim, they are still personally responsible for the information they provide.
Andy explains: “Any overpayments identified by HMRC would need to be repaid by the individual, not the agent.”
How can I check if I am eligible and claim?
You can check if you are eligible for tax relief online using the tool on the HMRC website.
You should do this before you submit a claim to avoid any issues.
When you claim, you must send in evidence that you have to work from home if you are claiming £6 a week for the 2022/23 tax year.
If you are claiming the exact amount you have spent then you will need to send evidence such as a copy of your receipt or bills.
If you complete a Self Assessment tax return then you must claim the relief through your tax return instead.
You can claim tax relief for the current tax year and the previous four if you have not yet done so.
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