A8.210 Homeworking and other expenses and coronavirus (COVID-19)
For the latest New Developments, see ND.1845, ND.1846.
Following a sudden unprecedented move for people to work from home temporarily during the coronavirus (COVID-19) pandemic, many employers, employees and individuals had queries around the income tax and NIC treatment in relation to costs incurred in relation to working from home.
An announcement was made on 13 May stating that a temporary exemption will be made for home office expenses reimbursed by employers. The exemption will be applied on a discretionary basis for expenses incurred from 16 March 2020. Legislation was published as SI 2020/524 and SI 2020/525 with an official commencement date of 11 June. The legislation requires that, as per ITEPA 2003, s 210(2), the exemption will apply only where the equipment expenses are made available to all employees generally on similar terms. This exemption is extended to the end of the 2021/22 tax year by SI 2021/225 and SI 2021/242.
HMRC has published guidance for employers on which expenses are taxable if an employee works from home due to coronavirus. It covers items such as mobile phones, broadband and laptops. The guidance confirms that any expenses or benefits that are related to coronavirus can be reported on the PAYE settlement agreement (PSA) if the employer wishes to settle the tax and NIC on them. It has been updated to reflect the announcement above on the temporary exemption.
The CIOT released a detailed guidance note on all