Brewers Chartered Accountants

HMRC relaxes home office equipment rules

HMRC has relaxed the rules that restrict reimbursement for spending on office equipment for the rest of 2020/21.

This is to help employees avoid a tax bill in relation to home working during the coronavirus lockdown.

Homeworking has become the norm for millions of UK workers since the lockdown restrictions were imposed on 23 March 2020.

The situation is expected to continue for some time, with many workers continuing to work from home and, therefore, requiring additional equipment to enable them to do so.

In order for employees to create an office-like space at home, employers can reimburse workers when they buy items such as keyboards, monitors, desks and chairs.

Under normal circumstances, there can be unintended tax consequences when employers compensate workers for the purchases of such items.

Fortunately, however, the government has clarified this will not be the case with effect from 16 March 2020 to 05 April 2021.

Jesse Norman, Financial Secretary to the Treasury, said “a temporary tax exemption and National Insurance disregard will come into effect”.

The Association of Taxation Technicians (ATT) welcomed the move to help employees avoid being hit with a tax bill as a result of homeworking.

Jeremy Coker, President of the ATT, said:

“In the current circumstances, some employees may have purchased equipment at their own cost to home-work as effectively as possible.

“Employers may even advise this and offer to reimburse their workers for the costs afterwards.

“Reimbursing the cost of office equipment would, under existing rules, be taxable and result in a tax bill for the employee.

“This is clearly unwelcome, and the announcement of a temporary exemption from Income Tax and National Insurance is fair and welcome.”

This move from the government creates an Income Tax and Class 1 National Insurance Contributions exemption for employer-reimbursed expenses covering the cost of relevant home-office equipment.

Get in touch

If you would like to find out more about this exemption, or any of the other measures the government has put in place to help businesses during the coronavirus pandemic, give us a call today on 01483 205850.


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