Introduction to this document

Employee homeworking expenses policy

The increasing tendency for individuals to work from home raises the question of which home-related costs can be reimbursed tax free by an employer. So you’ll need a company policy making it clear to your employees which expenses come with a tax bill.

Working from home

There has been a very large increase in the number of employees who work from home. A question often asked by employers is how the additional expenses the employee will incur as a result of working from home are to be met and what the correct tax treatment is for reimbursed expenses and the provision of equipment. The basic position is that if you provide an employee with equipment that can be used privately, there will be a benefits charge. It would be very difficult for you to keep a check on the use of the equipment and HMRC should accept that the private use is insignificant as long as you have a clearly stated Employee Homeworking Expenses Policy setting out when private use is accepted. In this case, there will be no tax or Class 1A NI due. The additional costs of such things as heating and lighting which arise due to working at home can be reimbursed without any charge to tax and NI.