People working from home could face HMRC bill | Personal Finance | Finance

HMRC is set to crack down on individuals who have incorrectly claimed tax relief for working from home. While many were entitled to this relief during the height of the pandemic, changes in the rules mean that some may no longer be eligible and could now face repayment demands.

According to the Telegraph, those who continued to claim without reassessing their eligibility might be hit with hefty bills from HMRC.

Tax expert Andy Wood from Tax Natives explained to the publication: “The criteria for claiming this relief changed following the Covid-19 pandemic. Many people who were eligible during the pandemic may no longer qualify today, so it’s important not to assume continued entitlement without checking.”

To assist taxpayers, the Gov.uk website offers a free online checker tool to determine current eligibility for the tax relief.

Basic-rate taxpayers are allowed to claim a flat rate of £6 per week for increased costs incurred while working from home, such as higher heating or electricity expenses. This relief can also be backdated for up to four previous tax years.

During the pandemic’s peak, around 800,000 employees took advantage of this relief, saving up to £125 each, as reported by HMRC.

However, since April 5, 2022, only those who are required to work from home because their employer lacks an office, or they have to live far from the office as part of their work.

HMRC has issued a warning to those working from home: if you are able to work from an office but choose not to, you may be incorrectly claiming tax relief and could be forced to repay it. With many still working remotely, HMRC is urging caution.

Additionally, HMRC is advising those eligible for the relief to be wary of third-party companies offering to claim it on their behalf, often taking a significant cut in fees.

HMRC advises claiming directly to avoid these unnecessary charges, stating on social media: “Don’t get caught out by ads promising quick tax refunds for working from home. Always check if you are eligible before making a claim. Avoid agent fees by claiming directly with HMRC.”

If an agency makes an incorrect claim on your behalf, you’ll be liable for the error and required to repay the full amount.