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With an increasing number of individuals embracing remote work, the question of tax deductions has gained renewed relevance. The fusion of home and office spaces has spurred inquiries about the potential financial benefits of working from home. In this context, it becomes important to understand the tax deductions that individuals can leverage while working from the comfort of their own homes.
There are two options available for claiming tax relief:
Flat Weekly Rate: Starting from 6 April 2020 (with a rate of £4 per week for previous tax years), you can claim £6 per week. For this method, there’s no requirement to provide evidence of your additional expenses.
Actual Expenses: Alternatively, you can claim the precise amount of extra costs that exceed the weekly rate. To do this, you’ll need to present evidence such as receipts, bills, or contracts.
The amount of tax relief granted will be determined by your applicable tax rate. For instance, if you pay taxes at the basic rate of 20% and opt to claim tax relief on £6 a week, you will receive £1.20 per week in tax relief (equivalent to 20% of £6).
Due to working from no longer being a legal necessity, the conditions for receiving tax relief have changed. Unfortunately, you can’t claim tax relief if working from home is a personal choice, only if you have incurred additional household costs due to working from home.
Click the following link to see more in depth examples of what qualifies for the Working from home Tax Relief.
HMRC has cautioned that merely instructing employees to work from home might not meet the criteria for claiming tax relief. Therefore, if your work arrangement involves hybrid working (splitting time between home and the office), you will be eligible for tax relief only if your employer’s premises lack the necessary facilities to effectively carry out your job tasks.
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