Dependent upon the contractual arrangements in place between employees and their employer, there have always been rules in place which can allow for certain expenditure to be refunded by HMRC or the employer, provided conditions are met.
Our recent news article talks through the detail of these rules:
However, recognising that many employees are now having to work from home during the coronavirus pandemic, HMRC have updated their website to provide guidance in this area; which expenses are taxable and which are not.
The updated guidance indicates that the £6 per week allowance, could be claimed by employees having to work from home due to the Coronavirus, acknowledging for many that there will be increased costs associated with working from home.
A link to the updated guidance is below:
This update outlines further rules associated with employees requiring mobile phones, broadband and IT equipment used in relation to work with their employer.
The new guidance highlighting these rules recognises that many employees, who may not have worked from home previously or as extensively, are and will face additional costs. In particular such costs will include expenses like electricity, heating or broadband.
The working from home allowance which HMRC indicates is now available to those working from home due to the coronavirus, provides tax relief to employees of up to £4 a week (£6 a week from 6 April 2020). This is a non-taxable amount for the additional household expenses incurred when your employee is working from home.
HMRC’s guidance suggests this amount can be paid or reimbursed by an employer, however it will be useful to get confirmation if an employer doesn’t make or reimburse such expenses, if an employee can make a claim through their self-assessment tax return or form P87 if an individual is not in self-assessment.
If the claim is above this amount, then an employee will need to:
- check with you beforehand to see if you will make these payments
- keep receipts
Any expenses or benefits which are related to coronavirus can be reported on your PAYE Settlement Agreement.
This means you can settle tax and National Insurance contributions on any expenses or benefits, even though the responsibility would usually be on your employee, or on both you and your employee.
This applies to coronavirus related items only, for example, a new desk can go onto the PAYE Settlement Agreement, but a new sofa cannot.
If you are currently payrolling benefits in kind, you may continue to report expenses and benefits through your payroll. You may also continue to report expenses and benefits through P11D returns.
As with much of the support the Government have put in place due to the coronavirus, this is a newly updated area of the HMRC manuals and we would suggest anyone wanting to make use of this additional relief, seeks professional advice from their business advisor to ensure they qualify.