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Not sure this is how tax reliefs work

HM Revenue and Customs is urgently reviewing a rule that allows anyone who works even a single day from home to claim a yearly sum of up to £125 in tax relief, The Telegraph can disclose.

OK

However, the rules were relaxed at the beginning of the pandemic to help the millions more people told to stay away from the workplace – with the tax-free amount raised from £4 a week to £6.

Umm

Claims can also be backdated, meaning that anyone eligible who worked from home because of Covid but never made a claim is entitled to a two-year payout of up to £250.

Payout? Is this a tax relief or what? A relief, I assume, being you can earn £125 without paying tax on it to cover these costs of working from home? Or maybe a £125 knocked off your tax bill to cover it?

But payout? Like, an actual claim against govt? Whut?

11 thoughts on “Not sure this is how tax reliefs work”

  1. You claim business related expenses of £312 per annum, knocks off £125 tax if you are higher (40%) rate. I know because I did this yesterday.

  2. Also, I expect the Telegraph phrase it as a ‘payout’ because if you don’t fill in a tax return, you claim WFH expenses on a separate website. If you are doing it for a previous tax year they then send you a cheque / BACS payment, hence ‘payout’.

  3. If you’re on PAYE, this tax relief is one of the rare occasions where the government pays you, rather than just changing your tax code.

  4. They’re talking about a backdated claim, so it’s a refund of tax already paid, generally through PAYE. Looks like a payout but actually a payback – you can only get it up to the amount of tax that you’ve actually already paid for that year.

  5. Bloke in North Dorset

    Why are they getting tax breaks for WFH in the first place? They’re saving commuting costs as well as time.

  6. It’d be nice to see some compensation for the people who courageously went to work & kept country functioning.

  7. How many of these recipients/clainants realise the CGT implications of telling HMRC that their principal private residence is actually or partially an office, or even 2 offices if there are 2 claimants living there?

  8. D

    Partially an office is fine, as long as it’s not exclusively in any way. Even 9-5 Mon to Fri for a room (used ordinarily as residential the rest of the time); and allocate costs and all that if it’s used sufficiently to justify that, ie instead of and beyond the “no questions asked” £6 per week. Doesn’t affect PRR/CGT or rates.

  9. @ Diogenes
    In most cases it is none.
    “using a room as a temporary or occasional office does not count as exclusive business use” – source HMRC website.
    The room in which I currently sit is classified as a bedroom but has never been used as one since it was built for the previous owners of the house: when working from home I used it as an office, when not working I used it for managing charity accounts, organising a road-running team, general paperwork, sorting out probate for my mother’s will/my mother-in-law’s will …. This doesn’t make me, or my heirs, subject to CGT on sale of my home.

  10. I trust them not to change that part retrospectively. Ie, I trust them not to go “if you has ever claimed this relief in the past, we is now going to retrospectively piss on you, and you is now screwed for both CGT and rates”. The relief is allowing a normal business cost as an expense (along with stuff like actual business use of a private phone line, etc) and has been there for years, used perfectly reasonably at low level by micro-business employees based out of residential premises.

    Yes, they could easily tweak the rules going forwards, and hence restrict or refine the basis for future relief.

    I mean sure, they can do anything I guess, same as for any tax, and sometimes do! But quite genuinely, I don’t expect them to do the former.

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