Those Working From Home (WFH) and employers who encourage their staff to purchase their own home-office equipment and reimburse the expense, can benefit from a temporary relief introduced as a response to Covid-19.
HMRC is creating a temporary Income Tax and Class 1 National Insurance Contributions (NICs) exemption for employer reimbursed expenses that cover the cost of relevant home equipment – equipment necessary to work from home as a result of Coronavirus including a laptop, desk or necessary computer accessories.
The exemption means that employees will receive the full reimbursement, free from tax and class 1 NIC. It will officially apply from the 11 June until the end of the tax year 2020/21, though HMRC have said that they will not collect tax and NI due on reimbursed payments made from 16 March 2020.
The policy will mean employees can buy the office equipment they need to WFH without worrying about tax and NI consequences and employers will not need to report the reimbursed expense. Employers must extend the benefit to all its employees generally on similar terms.
Prior to this measure, expenses incurred by employees buying equipment to put them in a position to perform their duties, rather than actually performing them, would normally have been subject to tax and NICs.
Craig Simpson, Tax partner at Bates Weston comments;
“Encouraging employees to work from home is central to the government’s strategy to control the virus. This temporary relief will make it as simple as possible for employees to properly equip themselves for working at home, without worrying about being fully reimbursed for the office equipment they need to buy. It is good to see HMRC continuing to respond to evolving work place practices.”