Tax tip: Work from home allowance

Employers can pay staff who work from home for some or all of the week a simple flat rate payment of £6/week or £26/month without creating a tax liability as long as this is a requirement of their employment rather than just their personal choice. This is intended to cover the employee’s additional costs of working from home.

The benefit of this payment is that it is simple to operate from both the employer and employee perspective eg there is no need for employees to keep records of the extra costs incurred from working at home.

However care does still need to be taken. Employees must be working regularly from home under a homeworking arrangement with their employer with the home location being a clear requirement or expectation for their particular role. While the rules were relaxed during the Covid lockdowns simply allowing staff to...