Check which expenses are taxable if your employee works from home due to coronavirus

The HMRC guidance has been recently updated to reflect the fact that employees can no longer be furloughed using the Coronavirus Job Retention Scheme. The scheme ended on 30 September 2021.

If any of your employees are working from home due to coronavirus (COVID-19), either because your workplace has closed, or they are following advice to self-isolate, then HMRC accepts there are non-taxable types of equipment, services or supply.

For example - if you provide a mobile phone and SIM card without a restriction on private use, limited to one per employee, this is non-taxable. 

Broadband - if your employee already pays for broadband, then no additional expenses can be claimed. If a broadband internet connection is needed to work from home and one was not already available, then the broadband fee can be reimbursed by you and is non-taxable. In this case, the broadband is provided for business and any private use must be limited.

Laptops, tablets, computers, and office supplies - if these are mainly used for business purposes and not significant private use, these are non-taxable.

Reimbursing expenses for office equipment your employee has bought - if your employee needs to buy home office equipment to allow them to work from home, they will need to discuss this with you in advance. If you reimburse your employee the actual costs of the purchase, then this is non-taxable provided there is no significant private use.

Employers can continue to pay their employees £6 a week to cover the additional expenses of working from home and the amount would be free of tax and national insurance. This is to cover the additional costs of electricity, heating and water whilst working from home. It has been confirmed that the amount may be paid regardless of the number of days that employees work from home.

HMRC guidance can be seen here: Check which expenses are taxable if your employee works from home due to coronavirus (COVID-19) - GOV.UK (https://www.gov.uk/guidance/check-which-expenses-are-taxable-if-your-employee-works-from-home-due-to-coronavirus-covid-19)

If you need to discuss employee expenses or loans or are looking to develop a more resilient employee expense policy for the future please talk to us and we will be delighted to assist you.