We’ve heard from multiple clients and connections across our networks about how they’ve adapted to working from home. It’s been very inspiring to see different ways that businesses have made remote working not only a viable option but also a productive system. If you’re currently delivering work this way, you should also be claiming for tax relief where applicable.
Tax relief for home office setups is nothing new, yet it’s never been more relevant. If you or your staff have purchased anything required to get work done, such as furniture, technology and stationery, you’ll be eligible for a little reimbursement. Prime examples are new computers, laptops and other devices, desks, chairs, storage units, professional subscriptions, office supplies and printer ink. As long as the items are used specifically for business, HMRC considers them eligible. For instance, clothing, rent and broadband can’t be claimed against, as they come under personal usage within your home.
Even the costs associated with small purchases such as paper, pens, folders, staples, postage costs and so on can build up over time, so it’s definitely worth looking at what you’ve bought whilst working from home. Not only will you be able to claim some tax relief on these items, but you can continue to do so going forward, potentially making significant savings.
If you’re self-employed, the process is very simple. All you have to do is include these costs in your next self-assessment tax return, or send a list to TreyBridge if we manage this for you. If you have staff, they too can claim tax relief whilst working from home, which is where the government’s P87 form comes into play.
How to fill in the P87 form
Chances are that any employees working remotely have had to buy some bits and bobs to make their roles run more smoothly. Providing you haven’t already increased their wages to compensate for these, they too can claim for tax relief as long as the expenses are less than £2,500 for the tax year.
How your staff are reimbursed relies on when these purchases were made. If they were within the current tax year (on or after 6th April 2020), HMRC will usually adjust their tax code accordingly. If they were in the previous tax year, they will most likely receive a cheque in the post – make sure to let them know that most banking apps allow cheques to be paid in digitally, saving a physical trip to a branch.
As for filling in the P87 form, your employees can do so through the Government Gateway if they already have an account, or complete it onscreen, print it out and then post to HMRC. (An image of the online version is shown below for reference.) Whatever the case, your staff should retain a copy of the form for their own records.
The P87 is pretty straightforward, asking for basic contact information, date of birth and National Insurance number, as well as the company’s name and their job title. They also need to add the employer’s PAYE reference and their employee number, which can both be found on their payslips.
The next section covers expenses, ranging from vehicles to hotel accommodation. Most of these won’t apply during the coronavirus crisis, in which case your staff can select the “No” option. However, further down the form there’s a section for “Other expenses”, which is where costs for the setting up and running of a home office can be entered. Following this, all they have to do is fill in the sections for total expenses, how they want to be paid and a declaration, then submit the claim.
If your staff are basic rate taxpayers, they will receive a tax relief of 20% on the total of their eligible expenses. For some staff this may be only a few pounds and for others it could go into the hundreds, which either way will be welcome news and help them to maintain healthy personal finances.
Need some help?
The above information should be enough for you and your employees to claim some tax relief from the government. If anything is unclear or you just want some reassurance, call us on 01482 235575, fill in our contact form or connect with Aaron on LinkedIn and we’ll ensure that you receive everything you’re owed.