Jesse Norman, the financial secretary announced the temporary measure of tax relief (income tax and national insurance contribution) under chapter 10 of Part 3 of ITEPA on the costs of purchasing the home office equipment by employees, where refund by the employer. The purpose of this tax relief is to support the employees and employers in purchasing the home office equipment to manage their working arrangements from home effectively as soon as possible due to coronavirus outbreak. This temporary measure of tax relief on home office equipment UK will apply from 16th March until the end of the tax year 2020/21 and HMRC will not collect any tax and national insurance contribution due on any reimbursed payment made from 16th March (when the government issued an order to work from home) until these regulations take effect.
To qualify for tax relief on home office equipment if:
- An employer must provide the home office equipment to enable an employee to work from home due to coronavirus outbreak and not for the private use.
- If the employer directly provides the home office equipment to an employee, then the employer would not be liable to pay income tax and NIC on these purchase or expenses under the section of ITEPA.
Types of coronavirus related home office equipment or supply:
- laptop, tablet, computer and office supplies: if your employees incurred expenses in purchasing the laptop, computer, tablets and office supplies for business purpose or to work from home and not for private use then you will not be liable to pay tax on your employee’s reimbursement or on these expenses or on actual costs of purchase.
- Mobile phone: If you provide a Mobile phone and SIM card without any restriction of private use, limited to one per employee, an employer will be liable to claim for tax relief.
- Broadband connections: if your employees have existing broadband connections at home, then it would not be non-taxable. On new broadband connections that were not already available and your employees needed it to work from home, you will not be liable to pay tax and NIC on your employees reimburse fee of new broadband connections.
Additional coronavirus related expenses:
An employer can pay to employees a fixed reimbursement or payment from 6th April 2020 up to £6 a week (£4 a week in the previous tax year) that is exempt from tax to meet the additional expenses like heating electricity and broadband incurred by employees to work from home. If the claim amount is above these additional costs amount or reimbursement amount, you will have to check with your employer sooner to see if your employer will pay these amounts and keep the receipts.
If the employer does not settle up these additional expenses of an employee working from home, the employee can also claim for tax relief to HMRC on these additional costs or expenses.
An employee can also get up to 10,000 employment-related loans (non-taxable loan) in a tax year from an employer at the time of need or suffering.
How to report to HMRC coronavirus related expenses and benefits?
Recording taxable expenses:
An employer can report coronavirus related expenses or items and benefits or to HMRC by a pay settlement agreement.
Recording non-taxable expenses or benefits:
An employer doesn’t need to record to HMRC of any non-taxable expenses.
How can Berkshire accountants and tax advisor help employer to claim costs incurred on home office equipment as employees working from home?
If you need any advice or help on any above issue or to reclaim costs incurred on home office equipment to enable your employee to work from and want to claim tax relief on home office equipment, you can get in touch with our expert team of Berkshire accountants and tax advisors at Berkshire accountants limited