Been freelancing or employed from home? Find out how to claim some tax back

Insight

If you’ve been working from home as an employee on PAYE or self-employed over the past year, there’s a high chance you’re owed some tax back. Extra expenses have gone into kitting out bedrooms, living rooms, and makeshift offices, as well as bills and household costs. We’re here to tell you how you can now claim tax relief for that time – even if you’ve only worked from home a handful of times since 6th April.

What is tax relief?

Tax relief decreases the amount of tax you pay to the government from your salary or freelance work. You will pay less tax to take account of the money you've already spent on electricity, water, gas, work equipment, transport, or uniforms.

Back in October, HMRC introduced a new microservice, which enables you to get the entire tax year’s claim regardless of how much you’ve actually spent at home, or whether you have receipts or not.

HMRC told MoneySavingExpert: “We recognise that the working-from-home situation is very fluid this year, so we're accepting claims for the full year’s expenses. Even if people have only worked from home for some of the year, to avoid needing to contact us if you have to work from home again”.

Who can claim it?

Both self-employed people and those on PAYE can get in on this.

PAYE
Employees who are on PAYE can claim immediately. This will amend your tax codes, meaning you’ll pay less tax out of your salary each month for the rest of the year.

Self-Employed
If you’re self-employed, you’ll have to wait until you fill out your next self-assessment form.

You will also be able to claim expenses for the entire year dating back to April 2020, regardless if you are PAYE or self-employed.

How much can I claim?

Up to £6 a week from 6th April 2020, which is an increase from £4 in previous tax years. You will not need to keep evidence of your extra costs, but if you've incurred anything above £6, then keep your receipts.

You’ll get tax relief based on the rate at which you pay tax. For example, if you pay the 20% basic rate of tax, and claim tax relief on £6 a week, you would get £1.20 per week in tax relief (20% of £6).

How do I go about claiming my tax relief?

Check if you are able to claim any tax back by completing this form on the Gov.uk website, and see more information here.

PAYE
If you’re on PAYE, talk to your employer about being paid £6 a week extra tax-free. However, if finances are a little tight for them right now, you can request the amount to be deducted from your taxable income via the HMRC microservice.

Self-Employed
Claim tax relief on £6 a week by completing the return online, you’ll need to fill in the box titled ‘other expenses and capital allowances’ in the employment section, and you’ll then claim for the entire year automatically.

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If you’re looking for more information on tax relief, MoneySavingExpert.com has a lot more detailed information on this and more.