Working from home and tax relief
- How do I know if I qualify?
- How much can I claim?
- What expenses can I claim?
- How to apply
Working from home (also known as remote working or e-working) is where you work from home for substantial periods on a full- or part-time basis.
You may be able to claim tax relief on the additional costs of working from home, including electricity, heat and broadband.
This document provides practical information and advice on tax relief for working remotely from home.
COVID-19 and working from home.
The COVID-19 emergency has had a big impact on working life in Ireland. Organisations are asking staff where possible to work from home to prevent the spread of the virus.
If you have been asked to work from home because of the COVID-19 emergency, you may be able to claim tax relief against the cost of home expenses.
It was announced in Budget 2021 that the following expenses will be covered as an allowable home expense for e-working tax relief. This begins in the tax year 2020 and applies for the duration of the COVID-19 pandemic:
30% of broadband costs for days worked at home
Other vouched expenses where they are “wholly, exclusively and necessarily” part of your work
You can only claim for these expenses if your employer does not already make payment towards the expense.
How do I know if I qualify?
E-working is where you work from home for substantial periods on a full- or part-time basis.
To qualify as an e-worker, you must:
Have a formal agreement with your employer that you are required to work from home
Be required to perform essential duties of employment at home
Working for substantial periods at home
Logging onto a work computer remotely
Sending and receiving email, data or files remotely
Developing ideas, products and services remotely
You are not entitled to claim tax relief if you bring work home from the office outside of normal working hours, for example in the evenings or at weekends.
More information on the eligibility criteria is available in Revenue’s Tax and Duty Manual on e-Working and Tax (pdf).
I am a cross border worker, am I eligible?
If you are a cross border or frontier worker employed in the Republic of Ireland and normally resident in Northern Ireland, and you meet the other eligibility criteria, you can also claim tax relief on e-working.
How much can I claim?
You may have extra costs when you are working from home including heating, electricity and broadband costs. Your employer can pay you a contribution towards these costs or you can make a claim for tax relief at the end of the year.
If your employer pays you a working from home allowance towards these expenses, you can get up to €3.20 per day without paying any tax, PRSI or USC on it. If your employer pays more than €3.20 per day to cover expenses, you pay tax, PRSI and USC as normal on the amount above €3.20. You should note that employers are not legally obliged to make this payment to their employees.
If your employer does not pay you a working from home allowance for your expenses, you can make a claim for tax relief at the end of the year. You will get money back from the taxes you paid.
If you share your bills with someone else, the cost is divided between you, based on the amount paid by each person – see Example 2 below.
Your refund of tax is based on:
How many days you worked from home
The cost of the expenses
Revenue’s agreed rate for calculating the cost of running a home office
Revenue’s rate for the cost of running a home office is 10% of the cost of electricity and heating. This means that you can claim 10% of the total amount of allowable utility bills against your taxes. You can also claim 30% of broadband costs for the tax year 2020.
This applies for the duration of the COVID-19 pandemic.
You can only claim for the days that you work from home. This does not include times you may have brought work home to do outside your normal working hours.
If your employer pays you an allowance towards your expenses, the amount paid is deducted from the amount you can claim back from Revenue.
Mary works from home for 9 months while her office is closed due to COVID-19. To make a claim Mary needs to work out how many working days she worked from home – she should exclude weekends, public holidays and any annual leave taken during the 9 months she worked from home. Her total working days are 168 (275 calendar days, less 78 weekend days, 7 public holidays and 22 annual leave days).
During 2020, her household bills for heating and electricity come to €1500 and her broadband comes to €450.
To find out how much tax she can claim back, Mary:
Multiplies the amount due on the utility bills by the number of days she worked (€1500 x 168 = 252,000)
Then, she divides her answer by 366 (252,000 / 366 = €689)
Lastly, she calculates 10% of this amount to find out what she can claim for heating and electricity (10% of €689 is €69)
Mary uses the same method to see how much tax she can claim back on broadband.
€450 (broadband bill) x 168 (days worked) = 75,600
75,600 divided by 366 = €207
Revenue will let Mary claim 30% of the cost of broadband. 30% of €207 is €62.
(Note: when calculating relief for 2020 divide by 366 days. For 2021 it will be 365 days.)
This means, at the end of the year, Mary can claim tax back on expenses of:
€69 for heating and electricity
€62 for broadband
€131 in total
The amount she gets back depends on her rate of tax. If she pays tax at the higher tax rate of 40% she will get €52.40 back from her taxes (40% of €131). If she pays tax at the lower rate of 20%, she will get €26.20 back (20% of €131).
What expenses can I claim?
Tax relief on e-working covers the additional costs of working from home. This includes:
- Other vouched expenses where they are “wholly, exclusively and necessarily” part of your work
- Items you buy, such as laptops, computers, office equipment and office furniture, are not allowable costs.
Should I pay tax on equipment from my employer?
If your employer gives you equipment that you need to do your work, like a computer or printer, and you mainly use it for work, it is not considered a benefit in kind. This means that you do not have to pay any tax for receiving the equipment from your employer.
Capital Gains Tax
If you use only part of your home for e-working, your home remains your Principal Private Residence and you are not liable for CGT when you sell it.
You can get more information from Revenue.
How to apply
You can claim tax relief online using Revenue’s myAccount service. You can use Revenue’s Receipts Tracker App to upload your receipts and bills. You can watch a short video explaining how to upload receipts.
To complete an Income Tax return online use the following steps:
Sign into myAccount
- Click on ‘Review your tax’ link in PAYE Services
- Select the Income Tax return for the relevant tax year
- In the ‘Tax Credits and Reliefs’ page (Page 4 of 5) select the ‘Your job’ tab. Select ‘Remote Working Expenses’ and insert the amount of expense at the ‘Amount Claimed’ section
- You must be able to account for each expense you intend to claim. This means keeping a record of all receipts and bills. You should keep all documentation relating to your claim for 6 years from the end of the tax year to which the claim relates.
You may also need a letter from your employer stating that you work from home.
Any further queries don not hesitate to contact Regina @ 01 2135910 or email@example.com