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Working from home tax breaks

HMRC has a useful guide for employers who have employees working from home due to the COVID-19 outbreak. This could be a result of the workplace being closed or because employees are following government advice to self-isolate. This guidance is not relevant for furloughed workers as they should not be doing any work whilst on furlough.

Employers may reimburse employees for certain household expenses incurred if they are required to work from home. In general, the expenses must be in relation to business use and there must be no significant private use. For example, if laptops, tablets, computers and office supplies are provided for business purposes and there is no significant private use, these are treated as non-taxable. There is no restriction on the private use of mobile phone and SIM cards which are limited to one per employee; these costs are non-taxable.

If an employer reimburses expenses incurred by an employee buying office equipment, this is taxable and should be reported on a PAYE settlement agreement.

Employers can pay a fixed amount of up to £6 per week (or £26 a month for employees paid monthly) to cover additional expenses for employees working from home to cover extra expenses relating to electricity, heating or broadband. These figures increased from £4 per week (or £18 a month for employees paid monthly) that were in place up to 5 April 2020.

Employers can also provide an employment-related loan. Loans provided with a value less than £10,000 in a tax year are non-taxable.

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