Coronavirus Q&A: Can my employees claim expenses while working from home?

In this latest edition of Q&A the Bright way, we clear up any confusion around homeworkers and expense claims.

BrightHR Team

The way we work in the UK has changed dramatically since the COVID-19 outbreak.

There are now thousands of people working from home for the first time. According to the Office of National Statistics, only 30% of UK staff had worked from home during 2019.

And this new way of working is posing new questions for employers like you. Such as should I reimburse staff for costs incurred while working from home? And are all coronavirus-related expenses taxable?

We asked one of our tax experts to explain all…

Our expert’s answer

If your employees are working from home as a result of the coronavirus (either because your workplace is closed or they’ve been told to self-isolate) they can claim expenses for any equipment or supply costs they’ve incurred.

But that’s only if you let them. As a business owner, you don’t have to reimburse your staff for any expenses, but given the current climate, it might be wise to offer your staff some support.

Your employees could put in expense claims for a range of items including office supplies, electrical equipment like laptops or tablets, or additional household running costs such as electricity, heating and broadband.

For example, if your employee had to have a broadband internet connection installed specifically to work from home, they could claim the broadband installation fee and ongoing charges from you. But here’s where it gets tricky…

To avoid a tax liability, your employee would have to limit their private use of this broadband—and if there’s significant private use, HMRC will consider it to be taxable. Also, if your employee already has broadband, then it will not be possible for them to claim any expenses without incurring a tax charge.

It’s important to remember that you’ll have to report any taxable expenses to HMRC. To see a full breakdown of which coronavirus expenses are taxable and which aren’t, head to the gov.uk website.

Any expenses which are related to coronavirus can be reported in a PAYE Settlement Agreement (PSA). This lets you make one annual payment to cover all tax and National Insurance.

Need help managing expense claims?

Get PoP. It’s an exclusive mobile app that makes managing coronavirus-related expenses easy.

Your employees use the app to snap a photo of their receipt and fire it over to you, and you approve or decline their requests in a simple swipe.

Plus, as you can export expense records at the tap of a button, PoP makes it quicker and easier for you to report expenses to HMRC. So forget long-winded paper approval processes…

Use PoP’s contactless expenses app today. To find out more about PoP, call us on 0800 783 2806 or book your free demo.