Your Guide to Claiming Working from Home Tax Relief
Surprisingly few people are aware that they can claim working from home tax relief in Ireland. The COVID-19 pandemic has rocked society to its core, leaving an indelible impact on our lives.
Before the pandemic, fewer than 5% of employees primarily worked from home. However, once the virus struck, over 40% of Irish staff worked remotely. People in this situation have reported a wide range of issues such as poor-quality broadband and accommodation unsuitable for a work environment.
Also, employees find that they use more heat and electricity, causing their energy bills to rise. If you are an e-worker, you are entitled to working from home tax relief, which can help you eat into these bills. Let’s find out more about it in this concise guide.
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Who’s Eligible for Working from Home Tax Relief?
In the most recent budget, the Irish government announced that employees with expenses incurred wholly and exclusively while working from home could apply for e-worker tax relief. In this instance, remote working is classified as ‘working outside your normal place of work for substantial periods.’
You fall into this category if your work has shifted from an office to your bedroom. You are also potentially entitled to working from home tax relief if you split your employment time between your home and your office.
Can I Claim Tax Relief Working from Home?
If the above applies to you, the answer is ‘yes.’ However, you must also have a formal agreement with your company that you’re required to work from home. The process of e-working can include:
- Logging into a work computer and working remotely.
- Sending and receiving messages or creating products, services, or ideas outside your typical workplace.
- Spending a substantial period of time e-working.
You can’t claim this form of tax relief if you bring work home from the office outside of your typical hours. A prime example is a 9-5 weekday employee bringing work home to finish on Saturday.
Incidentally, you CAN claim the tax relief if you are a Northern Ireland resident who usually works in the Republic of Ireland.
How Do I Claim Tax Relief Working from Home in Ireland?
The idea behind this form of tax relief is to help with extra electricity, broadband, and heating bills incurred at home. Your employer can pay a daily tax-free sum of €3.20 to cover the additional working from home costs. Please note that your company is not legally obliged to give you this money.
If they don’t, you can still claim the following when you have extra expenses:
- Up to 10% of the cost of heating and electricity for the tax year.
- Up to 30% of your total broadband costs for the tax year.
- How Much Tax Can I Claim Working from Home?
Remember, you don’t get the €3.20 per day expense if your employer doesn’t offer it. You can only apply for heating, electricity, and broadband expenses. Once you come up with the calculation, the amount of tax relief you receive depends on your tax bracket. If you are at a higher tax rate, you get 40% of the total expense amount. If you are in the standard bracket, you receive 20%.
In general, most employees who claimed working from home tax relief in 2020 received approximately €60 on average. Here’s an example of how to calculate what you’re entitled to.
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Example of Claiming Tax Relief
Patrick worked remotely for six months as his company requested all staff to work from home due to the pandemic. Calculating how many days he worked from home requires Patrick to exclude annual leave, weekdays, and public holidays. In total, he completed 130 days of work from home.
His heating and electricity bill for the whole of 2020 was €1,200. His broadband bill was €480 for the year. Now, Patrick does the following to calculate what he is entitled to:
- Multiplies the cost of his heating and electricity bill by days worked. €1,200 x 130 = 156,000.
- He divides his answer by the number of days in the year, which is 366 as 2020 was a leap year. So, 156,000/366 = €426
- Finally, he calculates 10% of the amount to finalise his utility bill claim: 426 x 0.1 = €42.60.
- Next, he multiplies his broadband bill by days worked: €480 x 130 = 62,400
- Then he divides this figure by days in the year: 62,400/366 = €170
- And finally, he gets 30% of this number: 170 x 0.3 = €51.
Patrick can now claim 42.60 + 51 = 93.60. As he is a higher earner, he can get 40% of that figure: €93.60 x 0.4 = €37.44.
Overall, then, Patrick could receive working from home tax relief of €37.44.
Are There Different Types of e-Worker Reliefs?
There are many types of tax relief that Irish workers seldom claim. While none of the following are explicitly for remote workers or even those who work at all, they are still worth considering:
- Help-to-Buy Scheme
- Cycle to Work Scheme
- Flat Rate Expense Relief
- Medical Expense Relief
- Home Carer Tax Credit
- Nursing Home Relief
- Rent a Room Relief
Where Do I Claim Working from Home Tax Relief?
Claim your tax relief online using Revenue’s myAccount service.
- Sign in and go to PAYE Services, then ‘Review your tax.’
- Choose Income Tax return for the correct tax year.
- Go to the ‘Tax Credits and Reliefs’ page, and click on ‘Your job.’
- Finally, choose ‘Remote Working Expenses’ and add your expense amount in the ‘Amount Claimed’ section.
Make sure you have all the relevant receipts for claiming these expenses.
Do I Have to Pay Tax on Equipment from my Employer?
If you receive equipment from your company, such as a printer or computer, that you need to perform your duties, it is not classified as a benefit-in-kind. As a result, you don’t pay any tax because your employer gave you the equipment.
Final Thoughts on Claiming Working from Home Tax Relief
The money you can claim seems relatively low, which is perhaps why so few people bother. However, isn’t it better to have an extra €40 for €50, which will take maybe a few minutes to apply for?
Research shows that 60% of workers entitled to e-worker relief don’t claim it annually. An estimated 30% have never claimed it at all. Aside from bringing in a little extra money, claiming working from home tax relief may result in you making claims for other expenses and tax breaks you are eligible for. It could be the catalyst for you saving hundreds, if not thousands of euros in the long term.