Claiming Tax Relief for Homeworking Expenses – Updated Guidance

31 May 2023

This is a follow-up to the earlier PSTAX advice in relation to claiming tax relief for working from home. Rather than an employee making a claim to HMRC, it is also possible for an employer to pay a ‘homeworking allowance’ to employees without giving rise to a tax/NIC liability. Unlike the tax relief claim, the exemption conditions for the payment of the allowance are less restrictive and so only two tests need to be met:

  • there must be homeworking arrangements between the employer and the employee; and
  • the employee must work at home regularly under those arrangements.

The arrangements should be part of the clerk’s contract, and these arrangements do not need to apply to all employees who may have a home base but work in a hybrid manner. Where these conditions are met, the employer may pay up to £26 per month (or £6 per week) to the clerks without any tax/NIC being due. Higher figures than this can be paid, but anything above the £26 will be treated as earnings for tax/NIC purposes.

If a clerk has multiple employers, each employer would be treated separately and so they could each pay the £26 per month.

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