Are you claiming tax relief on your home office equipment?

According to an article in The Times, HMRC is being “inundated” with claims for tax relief on items such as office furniture and printer ink, from employees who have been forced to work from home due to the Covid19 pandemic.

Millions of salaried employees in the UK, now working remotely because of Coronavirus are entitled to claim back tax relief, potentially worth hundreds of pounds, on items that are deemed “wholly, exclusively and necessarily” required to do their jobs, including office chairs, furniture, printer consumables and stationery.

Prior to Covid19 these claims, which are made using P87 forms sent to HMRC for up to four years on from the end of the financial year in which the items were purchased, were rarely made, as they were only available to workers who were made to work from home and not just working from home because they had chosen to do so.

Now that the Covid19 pandemic has forced millions of employees to work from home, HMRC is facing a deluge of claims for tax relief on these items. Speaking in The Times, as reported in the Daily Mail, Nimesh Shah, partner at tax firm Blick Rothenberg said: “Because a large number of people have been forced to work from home during the lockdown, HMRC will be inundated with claims for home working expenses.”

Online retailers are seeing massive increases in the sales of items related to remote working, with John Lewis reporting an increase of 123% in the sales of home office equipment, while the online furniture store Wayfair reported a 200% increase in searches for home office items, including bookcases, desks and office chairs.

HMRC requires that only items used exclusively for work can be claimed for, something which is as hard to prove as it is ridiculous; what if you use your work computer to briefly check the weekend weather? This means that claims for items such as broadband, computers or clothing will likely be refused by HMRC as they will be used in everyday life as well as for work, although in many cases HMRC will accept a reasonable apportionment.

Workers could potentially claim back hundreds of pounds, as the amount of tax relief they can claim for office equipment is the same as the rate of income tax they pay. So, a basic-rate taxpayer paying 20% tax on their (taxable) earnings will receive £200 for every £1000 of allowable expenses they claim back — 20% of what they had spent on the equipment.

HMRC told The Times that it didn’t know the precise figures for the number of P87 claims that it had received, only that there has been a significant increase.

“HMRC is at the forefront of the government’s response to the pandemic, and is working hard to deliver the schemes announced by the Chancellor to give security and reassurance to millions of workers and businesses around the country.”

“We would ask for patience from customers when making their applications.”

HOW TO MAKE A CLAIM

Self-employed workers should claim the same way as they usually do, with a self-assessment tax return.

If you are a salaried employee, you can submit a P87 form to claim for expenses of up to £2,500 per year. If your expenses exceed £2,500, you will have to submit a self-assessment tax return.

You can download a P87 form from the gov.uk website here and send it to HMRC either online or by post, although sending it online will likely be quicker, especially at the moment when HMRC are very busy.

You can make a claim at any time for up to four years from the end of the current tax year.

HMRC may refuse claims for ‘everyday’ items like broadband or a computer, but you can claim for items “wholly” necessary for your work, including such items as office chairs, desks, stationery, printer and other office supplies. If in doubt we would advise claiming for the items but ensuring that you describe them completely and accurately. The ball will then be in HMRC’s court. If they dispute any items you can either accept their decision or challenge them.

If you are successful in your claim, HMRC will either pay you by cheque or adjust your tax code so that you pay relatively less tax each month to cover the amount claimed for. You don’t have to include receipts with your P87 form, but you should definitely still keep them because HMRC may ask to see them at a later time.

We are happy to help you with any queries you have regarding making claims for tax relief.