uk iconUK

HMRC crackdown on working from home tax allowance

After more than two years of pandemic, PCR tests and on/off working from home, HMRC have signalled a return to normal in that, as from 6 April 2022, employees who were required to work at home by their employer and/or the Government can no longer claim a tax allowance of £6 weekly to help with the resulting increase in heating and lighting costs.
HMRC crackdown on working from home tax allowance
smsfadviser logo

Many staff have chosen to continue working from home or under hybrid arrangements, and whilst it may seem harsh, HMRC will not allow claims for home working unless their employer strictly requires them to do so. Otherwise, they are working from home by choice and any expenses do not meet the statutory “wholly, exclusively and necessarily” definition. It remains to be seen whether HMRC may begin to question some of the claims made previously – for instance, where two or more occupants of a property had claimed – although HMRC had encouraged people to make claims.

There are other issues coming out of the gradual return to normal working patterns, where HMRC had originally taken a relaxed (or ill considered) view during the pandemic’s height, such as employers providing home working equipment which HMRC strongly (but questionably) suggested was all tax free even if kept by employees. Computer monitors, webcams, office chairs could rightly be accepted as essential tools of work – but some examples we have seen - fully fitted “garden rooms”, large screen TVs, Netflix subscriptions and sofas - might soon attract HMRC’s attention. 

Last but not least, there are many employees now working where they are not supposed to be. British-based workers are still “working from home” from the patios of their French gites, and employees of UK companies who returned to their home country early in the pandemic and are still there in the blissful belief that because they are still paying tax and National Insurance in the UK on their salaries, the country they are in are not interested in their tax affairs. Most countries automatically treat individuals who have been present for more than 183 days in a year as resident, so many will have been resident outside the UK for 2 years now. If the CEO runs his UK company from the foreign poolside, he may find that the company it is now resident in another country and liable for their corporate taxes. 

Subscribe to Financial Accountant

Receive the latest news, opinion and features directly to your inbox