Claiming Working from home expenses

If you claim working from home expenses or other employment-related expenses, you need to know what is required for a successful claim.

Ways of claiming employment-related expenses

Currently, there are four different ways you can claim employment-related expenses, including working from home expenses.

These are:

• By including them in your Self-Assessment Tax Return
• Using a hard-copy P87 form
• Using an online P87 form via the Government Gateway
• By phone (if you’ve already claimed expenses in a previous year and your total expenses are less that £1,000 or less than £2,500 for professional fees and subscriptions)

Changes to P87 regulations

Legislation was enacted back in 2022 which made a series of changes to the way taxpayers claim expenses using the paper P87 form. This happened because many people were failing to provide all the information HMRC needs.

Now, you must include all the following information, or HMRC will reject your claim.

• Your full name, date of birth and address (including postcode)
• Your National Insurance number (if you have one)
• The amount of the deductible expense
• A description of the expense
• An employer’s PAYE reference
• A description of the employer’s industry or business sector (if claiming certain flat-rate allowances)

Working from home expenses claims

Many people have used the P87 form to claim flat-rate working from home expenses. These amount to £6 per week, or £26 per calendar month.

During the COVID-19 pandemic, huge numbers of people found themselves working from home for at least part of the time. As a result, during the tax years 2020/21 and 2021/22, HMRC didn’t require you to supply evidence of your working from home expenses.

Nowadays, you have to fulfil the following criteria to claim working from home tax relief:

• The duties you perform at home are ‘substantive’. This means all or part of your central employment duties.
• The duties can’t be performed without the use of appropriate facilities
• Appropriate facilities aren’t available at the employer’s premises (or you live so far away that’s it’s unreasonable to expect you to travel there daily)
• You are not given the ability to choose whether to work at your employer’s premises or elsewhere.

Importantly, you cannot claim working from home expenses if the following apply:

• Your employment contract lets you work from home some or all of the time
• You work from home because of COVID-19
• Your employer has an office, but you sometimes can’t use it because it’s full

What to do if flat-rate working from home expenses aren’t enough?

If you meet the criteria above and can still claim working from home expenses, you may find that £6 per week doesn’t cover what you spend on business phone calls or gas and electricity for your work area. If this is the case, you can calculate your exact costs and claim back tax relief at the rate you pay tax. At a time of high energy prices, this could be worthwhile. However, you will have to keep all relevant bills, contracts and receipts.

I’m self-employed. Can I claim?

If you’re self-employed, you can claim expenses based on the number of hours you work from home each month. This is a different scheme and you can find out more here.

As always, if you’d like any help or advice about the topics covered in this article, please contact your THP account manager.