There have been number of social distanced conversations where people have asked whether they can claim against their tax bill for the additional expenses that they have incurred by working from home. The answer as you would expect with anything to do with tax, is that it’s not quite as simple as a yes or no…
There is no doubt on the one side, that you may have incurred additional expenses probably in relation to heat, light, telephone and in some cases, extra equipment where you might have needed a new computer, chair, monitor or table.
Revenue Jersey has been quick to respond and has published some helpful guidance to cover the period from when the Government of Jersey started advising individuals to physically distance, which was Friday 20 March.
When your employer covers the cost of remote working
Where your employer covers the cost of working from home during this period, these payments can be ignored for tax purposes when they are £10 or less per week. These expenses do not need to be declared by your employer on their ITIS returns and should not be included on your personal tax return.
When your employer will not cover the cost of remote working
For those employees who have to work from home, but do not receive any type of payment from their employer, they may claim a flat rate of £10 per week to cover any costs incurred (heat, light, telephone, internet etc.). This claim should be made in the employment expenses section of the 2020 income tax return.
If expenses are greater than £10 per week, you have to consider whether the expenses have been incurred wholly and exclusively for employment purposes. This is where the position is not so clear…
If the employer pays the cost and satisfies himself that the expense is wholly and exclusively for the purposes of the employer’s business and the expenses are incidental, then they can be ignored.
For most people, the £10 per week allowance should cover most expenses. Besides, many have forgotten the fact that during the last 3 months they have not spent their cash on lunches, petrol, parking or that non-essential purchases whilst meandering through St. Helier on their lunch hour.
Nevertheless, if you believe that you have incurred costs over and above £10 a week, then you can claim on your tax return a higher amount. But, can you really meet the test that the costs are solely for business purposes and would you be able to prove that were the case if the Tax man were to ask? Was that second monitor or more comfy chair wholly and exclusively for the purpose of your employer’s business, or just a nice to have - to make life just a little easier in lockdown?
It is expected that the £10 allowance will remain in force while the Government continues the ‘work from home if you can’ policy.
When this is all over, and you chose to work from home rather than attend the office, then it is very unlikely that any claim to the tax man will be successful.