Calls for review of working from home tax rules

With more people now wanting to work remotely, the government are being urged to review the tax rules when it comes to working from home.

Currently, an employer can pay a standard £6 per week tax-free to an employee to meet extra household expenses that an employee incurs in carrying out their duties at home under a ’home-working arrangement’ (or more if the costs justify this).

Calling on the government for the review, the Chartered Institute of Taxation (CIOT) believes the tax rules could be more helpful for people who choose to work from home, particularly with hybrid working, where work is partly at home and partly at the employer’s premises.

Colin Ben Nathan, Chair of CIOT’s Employment Committee, explained, “Where an employer does not cover extra household expenses and the employee is instead seeking a deduction then it is a different story. The employee must then demonstrate to HMRC that the extra household expenses were incurred wholly, exclusively and necessarily in the performance of the duties of their work.

“This is a high bar and HMRC will only allow a deduction where there are no appropriate working facilities available at their employer’s premises and home-working is a necessity rather than a choice. While deductions have been accepted during the pandemic they would not be where, for example, an employee chooses to work partly from home under a flexible working arrangement.

“We believe the government should review the rules and allow a deduction in these circumstances to reflect modern, flexible working patterns.”

The CIOT believes that the review should look at the deductibility of travel costs to and from an employer’s premises where employees work part-time at home, as well as having the temporary easement that was introduced during the pandemic (which permitted employees to be reimbursed tax-free for the cost of purchasing home office equipment), made permanent.

Commenting on this, Colin Ben Nathan said, “There will be times when an employee who works partly from home is asked by their employer to attend the employer’s premises on a day when they would not normally do so. In these circumstances we believe that the cost of travel to and from the employer’s premises on those days should be deductible, rather than being disallowed as ordinary commuting.

“This easement expires on 5^th April 2022, but we think it was a very sensible change which should be retained in a world where flexible working is increasingly prevalent. At the end of the day what is the point of distinguishing between employer-provided home office equipment and an employee purchasing equipment and being reimbursed? We would say none!”

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