HMRC Pays £140 to Home Workers: If you’ve been working from home in recent years, you might be eligible for a tax relief payment from HMRC, worth up to £140. Whether you’re a full-time remote worker or a part-time home worker, this tax relief can significantly reduce the additional costs you face while working from home.
HMRC Pays £140 to Home Workers
| Key Point | Details |
|---|---|
| Tax Relief Amount | Up to £140 per year, depending on tax rate (Basic: £62.40, Higher: £124.80, Additional: £140) |
| Eligibility Criteria | Must be instructed by an employer to work from home, incur additional costs, and not be reimbursed by employer. |
| How to Claim | Apply online through HMRC’s portal or via Self-Assessment Tax Return. |
| Deadline for Claims | Claims can be backdated for up to four years. |
| Official Website for Reference | HMRC – Working from Home Tax Relief |
HMRC’s working from home tax relief is a fantastic initiative for employees who have incurred extra costs while working remotely. Whether you’re paying higher heating bills or using more electricity for your work computer, this tax relief can help lighten the load.
Introduction
In recent years, the shift toward working from home has become a permanent fixture for many people. While this offers great flexibility, it also brings additional costs for home workers, such as higher utility bills for heating, electricity, and internet usage. To help offset these expenses, HMRC (Her Majesty’s Revenue and Customs) offers a tax relief of up to £140 per year for eligible home workers.
This relief isn’t automatically granted—you need to apply for it. Thankfully, the process is straightforward, and we’ll break it down in this guide to help you understand the eligibility requirements and the steps involved in claiming your tax relief.
Understanding HMRC’s £140 Tax Relief for Home Workers
When the UK government introduced this tax relief, it was designed to ease the financial burden on employees who were forced to work from home due to the pandemic. The relief compensates for the additional costs incurred for heating, lighting, and phone/internet services used for work purposes.
HMRC provides a flat-rate relief of £6 per week for those who qualify. However, how much you receive depends on your income tax rate:
- Basic Rate Taxpayer (20%): You can claim up to £62.40 per year.
- Higher Rate Taxpayer (40%): You can claim up to £124.80 per year.
- Additional Rate Taxpayer (45%): You can claim up to £140.40 per year.
Let’s break down who qualifies for this relief, and how you can go about claiming it.
Why HMRC is Offering this Relief
The introduction of tax relief for working from home was primarily a response to the COVID-19 pandemic, which forced millions of people to shift to remote work. Recognizing that working from home can create extra financial pressures—such as higher electricity bills, heating costs, and the need for a reliable internet connection—the UK government decided to offer support through tax relief.
By providing this tax relief, HMRC is not only helping individuals reduce the additional costs associated with remote work but also supporting businesses by encouraging employees to stay productive while working from home.
Who is Eligible for HMRC’s Working From Home Tax Relief?
To qualify for the working from home tax relief, you need to meet several criteria. Here’s what you need to know:
1. You Must Be Instructed to Work From Home
If you’re working from home because your employer required it, you’re eligible to claim. This typically applies to people who were directed to work remotely during the pandemic, but it can also apply to employees who continue working from home as part of their job’s ongoing flexibility.
2. You Must Incur Additional Household Costs
If you’re paying extra for things like gas, electricity, or internet usage due to working from home, this relief can help offset those costs. However, you can’t claim for everyday costs that you would have incurred even if you weren’t working from home, like rent or council tax.
3. You Must Not Have Been Reimbursed by Your Employer
If your employer is already reimbursing you for the extra costs you’re incurring while working from home, you’re not eligible to claim this relief. The tax relief is intended for employees who bear the costs themselves.
4. You Must Be Paying Tax in the UK
Only employees who pay UK tax are eligible for the relief. You must also be liable for tax to receive the benefit, as it will be credited back to you through your tax code.
How Much Money Can You Claim?
The tax relief is a flat-rate amount, meaning it doesn’t matter exactly how much extra you’re spending on heating or internet—HMRC simply gives you a set amount based on your income tax band. Here’s how the calculation works:
- Basic Rate (20%): You can claim £6 per week, which equals £62.40 for the year.
- Higher Rate (40%): You can claim £12 per week, which totals £124.80 per year.
- Additional Rate (45%): You can claim £12.60 per week, which totals £140.40 per year.
Real-Life Examples to Illustrate the Impact
Let’s take a look at a few examples to see how much impact this tax relief can have:
Example 1: Emma, Basic Rate Taxpayer (20%) Emma works from home two days a week. She has higher heating and electricity bills but doesn’t get reimbursed by her employer. As a basic-rate taxpayer, Emma can claim £6 per week, which amounts to £62.40 per year.
Example 2: John, Higher Rate Taxpayer (40%) John also works from home and has similar additional costs as Emma. However, because John falls under the higher-rate tax band, he can claim £12 per week, which totals £124.80 for the year.
These examples show how much this tax relief can reduce the burden of working from home, depending on your income tax rate.
How to Apply for HMRC’s Working From Home Tax Relief
Now that you know you’re eligible, let’s look at how you can claim this relief from HMRC.
Step 1: Check Your Eligibility
Before you begin the application, ensure that you meet the following criteria:
- Your employer instructed you to work from home.
- You have incurred additional household costs.
- You have not been reimbursed by your employer.
Step 2: Apply Online Through HMRC’s Portal
You can easily claim the tax relief through HMRC’s online service. To do this, follow these steps:
- Visit the official HMRC website at Working from Home Tax Relief.
- You’ll need to sign in using your Government Gateway user ID and password. If you don’t have one, you can create it during the application process.
- After signing in, you’ll be prompted to answer a few questions to confirm your eligibility.
- Once you’re verified, the system will automatically calculate how much tax relief you’re entitled to.
- Submit your claim, and HMRC will process it. Your tax code will be adjusted accordingly, reducing the amount of tax you pay each month.
Step 3: Self-Assessment
If you complete a Self-Assessment tax return, you can also claim this relief by entering the details on your return. HMRC will adjust your tax liability, and you’ll receive the relief either as a reduction in your overall tax liability or through a change in your tax code.
Step 4: Confirm Your Tax Code
After your claim is processed, make sure to review your tax code. HMRC will adjust your tax code to reflect the relief, and this will show up on your payslips. If there are any discrepancies, you should contact HMRC.
Common Mistakes to Avoid When Claiming the Relief
While the process is straightforward, many people make mistakes when applying for tax relief. Here are some common errors to watch out for:
- Not Checking Eligibility: Ensure that your employer instructed you to work from home. If you voluntarily chose to work from home, you may not be eligible.
- Claiming for Costs You Can’t Reimburse: Don’t claim for costs like rent or council tax. Only claim for costs directly related to working from home, like electricity and phone bills.
- Missed Deadlines: While you can backdate claims for up to four years, it’s always a good idea to apply as soon as possible to avoid missing out.
Can You Backdate Your Claim?
Yes! One of the best features of this relief is that you can backdate your claim for up to four years. If you worked from home in previous years, even if you didn’t apply at the time, you can still claim the relief for the previous tax years. This can result in a substantial rebate if you were eligible for multiple years.
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FAQs About HMRC Pays £140 to Home Workers
1. Can I claim if I worked from home during the pandemic?
Yes, as long as your employer instructed you to work from home, you can claim the tax relief. You can even claim for previous years.
2. What can I claim for?
You can claim for extra costs related to heating, lighting, phone calls, and internet. However, you cannot claim for rent, council tax, or mortgage payments.
3. How long will it take to receive the payment?
The relief is applied through your tax code, so you won’t receive a direct payment. Instead, your tax code will be adjusted, and you will pay less tax as a result. This could be reflected in your pay within a few weeks.
4. Can I apply if I’m a freelancer or self-employed?
This tax relief is available to employees, not freelancers or self-employed individuals. If you’re self-employed, you may be able to claim other types of relief.
