Making Cents: How to save money while working from home

If you are one of the tens of thousands who made the move to working from home this year, now is the time to figure out if you can make a claim with Revenue for tax relief on the cost of utilities during the period you were at home rather than in the office.

There are two ways workers can be financially supported while working remotely. An employer can make a voluntary payment to an employee of €3.20 per workday without deducting any PAYE, PRSI or USC. This payment is intended to cover expenses such as heating and electricity costs.

But there is no obligation on the employer to make this payment and, according to a recent survey from Taxback.com, just 5% of employers of Ireland’s remote workforce are paying it.

“Many businesses, who are already cutting budgets to stay afloat, are not in a position to pay this additional amount,” Marian Ryan, Consumer Tax Manager with Taxback.com said. “This payment is certainly not widespread.” If you are working from home and not receiving the payment, you can claim eWorker tax relief instead.

“While it’s not a huge amount, it’s still worth claiming,” Ms Ryan said. “And the process to claim is not difficult.

“What’s more, the allowable percentage of broadband bills, was increased from 10% to 30%, in relation to working-from-home expenses.” 

So how do you work out what you can claim?

Allowable costs for this tax relief have been set by Revenue at 10% of the cost of electricity and heat incurred and 30% of the cost of broadband incurred. The broadband concession was introduced earlier this year and is due to apply for the duration of the pandemic.

You can only claim for the days when you were working from home.

To calculate your electricity and heat eWorking costs, Revenue advises you multiply your allowable utility bills by the number of days you worked remotely, divide by 365 and multiply by 10% (0.1). You do the same for your broadband bill except multiply by 30% (0.3).

If more than one person in the household was working from home, the relief should be shared based on the amount each paid.

To make the claim for tax relief you need to sign into www.ros.ie/myaccount, select the income tax return for the relevant tax year, in ‘Tax Credits & Reliefs’, select ‘Other PAYE Expenses’ and then insert the amount of eWorking expense in Amount Claimed.

While you may not be asked to provide proof of payment in order for the claim to be paid, it is your responsibility to have documentation if it is needed. Revenue asks that taxpayers retain all documentation relating to a claim for six years.

It can seem daunting to go about making a claim, particularly if you haven’t done it before, but Revenue’s online MyAccount system is straightforward and simple to use. Once you have your PPS number and personal information to hand, you can get set up quickly and most refunds are processed and lodged to your bank account within five working days.

If you register for the first time in order to claim eWorker relief, it is also a great opportunity to check if there are other reliefs and refunds due to you. Remember, you can go back four years.

“Irish people are poor at claiming tax refunds and the findings of this survey supports this contention – 6 in 10 people do not claim on a yearly basis, and more than 3 in 10 have never claimed at all,” Ms Ryan said.

“We are calling on these workers to get what they’re owed.” 

Taxback.com have highlighted a number of tax reliefs to which many of us are entitled and may not be claiming.

These include Medical Expense Relief. If you have paid for eligible health expenses you will be entitled to claim relief at your standard rate of tax - 20%. Day to day medical expenses such as doctor’s visits and prescription fees are often overlooked but can equate to a substantial amount over the course of a year.

Others include Flat Rate Expense Relief, the Home Carer Tax Credit, Nursing Home Relief and relief where third-level tuition is being paid. 

You can get more details on these and other tax reliefs at Revenue.ie.