A relaxed tax-break that pays employees £125 for working from home will come to an end this year, it has emerged.
Rishi Sunak is expected to close HMRC’s work from home relief, a benefit that has cost the Treasury about half a billion pounds since April 2020, according to reports.
The tax break allows workers to claim a rebate for working from home - even if they only spent a single day away from the office in that tax year.
It equates to £125 from April to April and you can currently claim the money back for 2020 to 2021 and 2021 to 2022.
The relief was initially brought in in 2003 as a way to help home workers with gas, heating, internet and other utility bills, but the cost of it has sky-rocketed following government guidance to stay at home.
About 4.9million people claimed the tax break last year, according to HMRC.
The bill for the Treasury has surged from £2million a year to £500million.
HMRC has reportedly written a report for the Chancellor, asking him to axe the scheme altogether.
A Treasury source told The Daily Telegraph: “This is a tax relief that existed before Covid and it was there for legitimate reasons but the take-up is now much higher so it needs to be looked at.”
There were 13.4million people working at home in the week up to January 16, data from the Office for National Statistics has found.
“The government has started hiking taxes to claw back some of the money it spent on helping us get through the pandemic,” Sarah Coles, money expert at Hargreaves Lansdown told The Mirror.
“Anyone who is working and earning over the minimum threshold will face higher NI as a result, and we can’t be certain that this is the last of the bad news on tax hikes.
“It means we should take advantage of any tax relief we can get, and the working from home rebate is a no-brainer if you work for an employer.
“If you’ve been required to work from home at all, and your costs have increased as a result, you can claim for a whole year,” Coles added.
You only need to have worked one day from home to claim the refund - but it only applies if you've been told to work from home by your employer, not if you were asked to go out to work, but chose not to.
If you are a sole-trader, you can claim the money through 'work expenses' on your next self-assessment.
If you're employed, you can claim the rebate from your employer or HMRC directly.
You don’t need to submit evidence such as receipts with your claim.
Taxpayers who are eligible can claim tax relief based on the rate at which they pay tax.
For example, if an employed worker pays the 20% basic rate of tax and claims tax relief on £6 a week, they would receive £1.20 a week in tax relief (20% of £6 a week) towards the cost of their household bills.
You can claim £2.40 a week if you pay the higher 40% tax rate.
Workers can find out more and make a claim here.
