Working from Home Tax Relief
What is it and how can I claim it?
Revenue states that e-work occurs where an employee works:
Where e-work involves:
E-working is different to and not to be confused with any employee who brings work home outside of normal working hours. Employers can make a payment of €3.20 per day to an e-working employee to cover expenses such as heating and electricity without deducting PAYE, PRSI and USC. However, an employer is not legally obliged to make this payment to their employees.
Are there any conditions?
The €3.20 per day payment is tax free where a formal agreement exists between employer and employee stating the requirement to work from home. The employee must also work from home for substantial periods of time. If an employee’s costs are higher than €3.20 per day the employer may repay these expenses. However, any amount greater than €3.30 per day is taxed as normal for PAYE, PRSI and USC. All payments must be recorded by the employer. If an employer does not pay €3.20 to cover e-working expenses, an employee can claim tax back on household expenses including heating, electricity and broadband. If an employer pays €3.20 to you, but your costs are greater, you can still claim tax relief on the balance.
What expenses can I claim when working from home?
Tax relief covers expenses such as heating, electricity, broadband. Receipts and records must be kept for these expenses in order to make a claim. The tax refund is based on the number of days worked from home, the cost of the expense and Revenue’s agreed rate for calculating the cost of running a home office. The agreed rate is 10% of the total amount of allowable utility bills against your taxes. This is only available for the days you work from home. If an employer pays an amount towards an employee’s expenses, the amount paid is deducted from the amount you can claim back from Revenue.
Example
John works from home for 6 months due to the pandemic. His bills for heating, electricity and broadband come to €2000. At the end of the year he can claim tax back on his expenses amounting to €200 (10% of €2000). The amount he will get back depends on his rate of tax:
At the higher rate he will receive €80
At the lower tax rate he will receive €40
What about Equipment?
Office equipment such as a computer, printer, software, telephone or office furniture may be provided by the employer to the employee for business use. This is not a Benefit in Kind where private use by the employee is minimal. Where an employee uses their own laptop for work, a wear and tear allowance can compensate for the depreciation of the equipment. The wear and tear rate is 12.5% annually over 8 years. Revenue accepts that 10% is for business use only.
Will e-work affect a Principal Private Residence Relief claim?
If an employee uses part of their home for e-working, it will not affect their Principal Private Residence Relief claim for full exemption from Capital Gains Tax.
Will my Local Property Tax be reduced?
An e-working employee will not receive a reduction on Local Property Tax if they use a room at their home for work purposes.
