Tax implications of home working: equipment

When the UK went into lockdown in March, no one anticipated that we would be entering another in November. Again we have been told that those that can, must work from home. With the second lockdown starting today, many employees that had put-off purchasing home office equipment first time round, with the hope of returning to the office, may now be changing their minds.

It is therefore useful to know about legislation brought in over summer that introduced a temporary exemption to Income Tax and Class 1 National Insurance contributions on relevant home-office equipment purchased by employees which was then expensed and reimbursed by employers.

The regulations set out that ‘relevant home-office equipment’ means equipment obtained for the sole purpose of enabling the employee to work from home as a result of the coronavirus outbreak.

The regulations came into force on 11 June 2020, and apply to expenses reimbursed on or after that date, up to the end of the 2020-21 tax year.

For employers that are not reimbursing employees for such equipment, it is useful to tell staff that they can claim the tax relief directly, either on their own tax return or P87, as long as the amount claimed is incurred exclusively and necessarily for the performance of their duties of employment.