Tax and NI relief on home-office expenses extension

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The temporary exemption of Income Tax and National Insurance Contributions (NICs) for home-office expenses has been extended. 

Initially scheduled to end on 5 April 2021, the measure has now been extended until the end of the 2021/22 tax year. 

Employees working from home due to the COVID-19 pandemic, and employers who encourage staff to buy home-office equipment to allow them to work from home effectively, will be able to benefit. 

What does the extension mean? 

It means that the temporary exemption of Income Tax and Class 1 NICs for employer reimbursed expenses covering home-office equipment will be extended until the end of the 2021/22 tax year. 

For the exemption, the classification of home-office equipment is materials that enable employees to function effectively from their own home. It covers items such as laptops and computer equipment, desks and chairs.

It is worth noting that the items concerned must not be bought with the intention of "significant" private use.

What does "home-office" equipment cover?

Home-office equipment is classified as the equipment that is deemed necessary for an employee to work from home. 

It covers items such as a laptop, desk, monitor, chair and other computer accessories. 

Through the exemption, employees will receive the full reimbursement free from Income Tax and Class 1 NICs up until 5 April 2022.

Why has it been extended?

At the beginning of the pandemic, restrictions requiring employees to work from home were designed to prevent the spread of COVID-19. 

Although many of these restrictions have now been lifted, the advice remains for individuals to continue working from home if possible.

This measure has been extended to ensure that employees can continue to purchase the office equipment necessary to work from home without worrying about the consequences of Income Tax and NICs. 

Employers will continue not to be required to report the reimbursed expense which would typically be liable to both Income Tax and NICs. 

How to claim? 

Employees reclaim by following their company’s expense policy. 

For employers, there may be tax benefits that can be gained when submitting year-end accounts. 

Any businesses unsure about the correct procedures to follow would be recommended to contact their accountant.

PayFit blog author

PayFit blog author

PayFit

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