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Over 1m reclaim working-from-home tax relief in just six weeks

Over 1m reclaim working-from-home tax relief in just six weeks

More than one million people working from home have saved up to £140 a year after filing tax relief claims using HM Revenue & Customs' new online service.

MoneySavingExpert.com founder Martin Lewis also highlighted the new service on his blog and in his weekly email encouraging people to submit claims.

This means well over 20,000 people have claimed the relief each day since the service launched on 1 October 2020.

But given millions more Brits are still likely to be working from home due to the current lockdown in England, which began on 5 November 2020 and lasts until 2 December 2020, Martin is still calling on everyone who has worked from home – even just for one day – since the crisis began to claim.

It is, however, important to note that this only applies to those told by their bosses to work from home – you can't submit a claim if you simply worked from home out of choice.

'This is a staggering number of applications in a short space of time'

Martin Lewis, founder of MoneySavingExpert.com, said: "This is a staggering number of applications in a short space of time. Around 10 days ago, HMRC told me it'd hit 730,000, and that much of the huge spikes were due to the guide here on MoneySavingExpert and me shouting about it on telly. So I used that as a reason to rave about it again, and I'm delighted now the one million mark has been hit.

"It looks like a little bit of shouting and raving has paid dividends (well, paid tax relief anyway). This really is a no-brainer move for any employee who's worked from home for even one day since 6 April – the gain isn't huge, at around £60 for a basic-rate taxpayer and £120 for someone on the higher rate, but as most people tell me it takes only around two minutes to do, that's an impressive hourly equivalent rate!"

Why can you claim tax relief?

If your employer requires you to work at home, you can – and always have been able to – claim for increased costs, such as energy bills. Apportioning extra costs is tough though, so instead you can claim a rate of £6/week.

This can be paid by your employer, but given many are struggling right now, they might tell you to claim tax relief on this payment via HM Revenue & Customs (HMRC) instead. What this means is you don't pay any tax on this £6/week amount.

You can claim £1.20/week if you're a basic-rate (20%) taxpayer, £2.40/week if you're a higher-rate (40%) taxpayer, or £2.70/week if you're an additional-rate taxpayer (45%).

So over the year, that's £62.40 for basic-rate taxpayers, £124.80 for higher-rate taxpayers, and £140.40 for additional-rate taxpayers.

See Martin's Working from home due to coronavirus, even for a day? Claim a year's worth of tax relief blog for full details on how the tax relief works.

How can I claim the tax relief?

HMRC has set up a new dedicated working-from-home tool that automatically applies the whole 2020/21 tax year's relief via your tax code – making claiming the whole amount very easy. Anyone making a claim for this tax year, who hasn't already put in a claim, can use it.

To make life even simpler, due to the coronavirus pandemic, for this tax year only (2020/21), you only need to claim once, and you automatically get the benefit for the entire tax year. 

In fact, you can actually use it to claim just a smidge before this tax year too. You can use it to make a claim since lockdown started on 23 March 2020 – just put that date in. Do that and you'll get a refund for the whole of this tax year (which started on 6 April 2020) and two weeks extra on top.

You'll need to have your Government Gateway ID to do it. If you don't have one, you can create one as part of the process. Along the way you'll also be asked if you're claiming any other work-related expenses, and as a note, if you wear a uniform to work, it's worth reading our Uniform Tax Rebate guide first to see if you can claim that too.

Don't expect to receive a cheque for this money though. It is done by altering your tax code, which is what indicates to your employer how much tax to take off your payslip – it should be amended in your personal tax account within a couple of days. The result will be less tax taken off each month for the rest of the year, which means you'll take home more.