Tax on staff equipment used for working from home

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The government advice is still ‘work from home if you can’ and for a number of businesses, mine included, this has proved to be a great way to keep going during lockdown. I don’t have to worry about commuting (time and cost), I have more control over my work/homelife balance, and it means better and bigger lunches, brought to me. If you’re someone who has worked from home before, you’ll already have your equipment and stationery for your business there. If you’re new to WFH, you may have purchased equipment, including computers, accessories, and even desks, so that you can work. If that is the case, I have some good news for you.

The cost of the stationery and other ‘consumable’ items can be reimbursed by the employer and that reimbursement is not taxed on the individual under current tax rules. Equipment, including the examples mentioned above, if they are bought by the employer and used at home by the employee will also not be a taxable benefit, providing the private use of that equipment is minimal.

However, under the current rules, if an employee purchased that equipment and then claimed reimbursement of the cost of that equipment from the employer, that reimbursement is treated as salary and subject to tax and national insurance.

HMRC have recognised that this anomaly is particularly harsh with the Government actively encouraging people to work from home and have extended the exemption to cover reimbursement of the cost of equipment as well as consumables.

To qualify for the exemption, there are two conditions to be met:

  1. The equipment must be solely to enable the employee to work from home as a result of the coronavirus outbreak
  2. The provision of the equipment would have been exempt from income tax under the original legislation if it had been provided directly to the employee by the employer.

The benefit must also be available to all of an employer’s employees on generally similar terms and remains in force from 11 June 2020 until 5 April 2021.

Unsure if the equipment you’ve purchased qualifies? Or you’re looking to purchase new equipment and want to make the most of this benefit? Email us today at info@stones-ac.co.uk

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