Remote working during Covid? Don’t forget to claim your tax relief

Why leave over €100 of your money in Revenue’s pocket?
Remote working during Covid? Don’t forget to claim your tax relief

Revenue estimates that as many as 875,000 people are or have been remote workers. Picture: Pexels

According to a new survey, more than eight in 10 people in Ireland’s new mobile workforce could be missing out on up to €100 per year by not claiming the work from home tax relief.

Tax refund company polled 1,200 taxpayers about how the relief works, and found that most of us don’t fully get it, particularly when it comes to house-shares.

Barry Cahill of cites a Revenue tax strategy group paper that estimates that as many as 875,000 people are or have been remote workers.

“However, just 90,000 people made a claim for tax relief for working from home expenses as of May of last year, so just 10% of those who are eligible. In our own survey, only 17% of the respondents who work from home said they had claimed the relief.

“We have been advising any clients working from home to collate their bills and claim this relief. Anyone not doing so is missing out on free money, and while the amounts may be small, it’s hard to understand why anyone would not want this money in their pocket instead of leaving it with the taxman.”

Your entitlements

So what does the relief entitle you to? Remote working relief allows people to claim tax relief of 10% of the cost of electricity and heating, and 30% of the cost of broadband, apportioned over the number of days you worked from home over the course of the year.

As Mr Cahill points out, of those who have worked from home, only 17% claimed the working from home relief. Some 42% hadn’t claimed, 33% said they hadn’t done so because they didn’t know how, while 8% said they chose not to. The survey also found that those living in house shares don’t understand how the relief is calculated.

“Most people in our survey did not know that relief can be claimed on their share of the bills. In fact, almost half of those who took the survey believed that the relief wasn’t available to those in house shares. This is untrue. If you share your bills with someone else, the cost is divided between you based on the amount paid by each person (whether their names are on the bill or not).

"With thousands of people in the working-from-home brigade sharing their accommodation with others, eligibility for this relief for people in this scenario is likely to be commonplace."

It’s also worth pointing out that r emote workers are entitled to a tax-free payment of €3.20 per day from their employer to cover the additional costs of their utility and broadband bills. Employers don’t have to pay this however, and when they don’t, that’s when the remote working relief comes in.

Mr Cahill offers this working example.

Say for example someone started working from home full-time at the start of the pandemic in March 2020, and remained at home working full-time for the rest of that year. They would have worked from home for 210 days (42 weeks x 5 days). Their utility bills and broadband bills would have to be apportioned out so that they could decipher their deductible costs.

Mr Cahill had hoped that the Government might increase the relief available to workers in 2022, but this didn’t happen. He says that claiming remote worker relief is worth considerably less than the €3.20 per day payment that is offered as an alternative, but which some employers haven’t been able to pay.

“If we take a person working from home for 210 days with broadband and heating bills of €3,000 as an example. The €3.20 per day would be worth €672 to that employee, whereas if they were to claim remote worker relief, it would be worth less than €100.”

"This is an area we’d like to see the Government reconsider in 2022 and move toward a simpler form of tax relief — perhaps similar to flat-rate expenses."

Flat rate expenses, as the name suggests, are fixed amounts that can be claimed by certain categories of worker. Racing grooms, for example, can claim relief of €294 per year to cover the cost of clothes and equipment.

Mr Cahill urges remote workers to take advantage of all of the reliefs available. He notes that some people simply don’t know about them, others might not fully understand how they work and more again may believe they’re too much hassle to claim.

“But we want to dispel these inaccuracies and myths. Simply put, tax refunds like this are money for jam as the saying goes, and what we have found is that claiming tax back is habitual, so those who don’t claim now are likely to miss out on other reliefs too.”

How to claim

To claim the relief for 2020 or 2021, you upload your receipts and images of utility bills paid in the period using the receipts tracker in myAccount, which is the single access point for online revenue services. Note that the receipt image must be clear, readable and show that you paid the bill amount claimed. You don’t actually have to upload the receipts, but if you don’t, you have to retain the originals in case Revenue wants to see them down the line.

To actually claim the relief once the amounts are input, you’ll have to complete your tax return for the year. If you’ve already made your tax return for 2020 or 2021, you can still claim.

You sign into myAccount, and on the 'PAYE Services' card, select 'review your tax' 2017-2020. Next, select the year: ‘2020 Income Tax’ for example, and hit 'submit'. In 'Tax Credits and Reliefs', select the 'Your Job' tab and then select 'Remote Working Relief'.

With the lifting of restrictions, the government is anticipating a ‘phased return’ to the workplace in the months ahead. There will be many of course who will wish to hold onto their remote worker status, and while we don’t yet know if the relief itself will be retained into the future, it seems unlikely that it would be withdrawn in the near term.

Barry Cahill says he expects remote working to proliferate among the Irish workforce, and believes that we must do more in 2022 to call people to action and explain how they can avail of the relief.

“While the language around these reliefs can sometimes be complex, the actual process of claiming is very easy. We believe that 2023 will see a significant increase in the numbers claiming as many will be able to do so for 2020, 2021 and 2022 altogether.”

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