HMRC relaxes stance on home office equipment until 2021/22

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

This should help employees avoid receiving a tax bill relating to working from home during the coronavirus lockdown.

Since the lockdown restrictions were imposed in the UK on 23 March 2020, homeworking has effectively become the norm for millions of workers.

Many employees are expected to continue working from home for the foreseeable future and may require additional equipment.

Employers can reimburse workers for purchases of items like monitors, keyboards, desks and chairs to create an office-like space at home.

In normal circumstances, unintended tax consequences may arise where employers compensate workers for the purchases of these items.

Fortunately, the Government has clarified this will not be the case with effect from 16 March 2020 to 5 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.”

The move creates an income tax and class 1 national insurance contributions exemption for employer-reimbursed expenses that cover the cost of relevant home-office equipment.

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