Working from Home - Flat rate allowance

A business may pay an employee up to £6 per week (£26 per month), free of tax and NICs when there are arrangements between the business and employee under which the employee regularly performs some or all of their employment duties at home. The amount is to cover the extra day-to-day costs of running the employee’s home, e.g. heating and lighting, but the employee does not need to keep records of the precise costs incurred.

The easiest way to implement this is to add this amount to their wages each month (our payroll team can support you with this).

If the business does not make a payment towards the employee’s household running costs, the employee can make a claim to HMRC for tax relief on £6 per week, as long as there are appropriate home working arrangements between the business and employee.

To make a claim employees will need to:

  • Head to the government’s microservice portal and answer the eligibility questions
  • Answer questions about other work-related expenses that they could also claim for
  • Create a Government Gateway ID  – they probably won't have one, but they can create one during the process
  • State the date that they started working from home

Directors are welcome to claim this allowance too, however if you usually complete a self-assessment, you won’t be able to use HMRC’s online portal; instead apply for the tax relief on your tax return (or if we complete the return then we will include it, if relevant for you). 

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