It’s long been the case that, if an employer requires an employee to work from home, they can pay them a small tax-free amount to reflect the extra costs that the employee might incur as a result. It’s also long been the case that, if the employer doesn’t do that, the employee can at least ask HMRC for tax relief on the allowance they could be receiving but are not.
Until 2020-21 it didn’t happen very often, but of course last Spring the number of employees working from home increased exponentially. Many (probably most) employers didn’t pay the allowance (£312 for the whole year) - apart from anything else, the employees were generally financially better off anyway as a result of not having to commute. So lots of employees claimed tax relief on the £312 instead, which meant HMRC adjusted their PAYE code to collect a little bit less tax each month.
With most PAYE code adjustments, HMRC automatically roll it forward year-on-year, on the assumption that the situation will persist. However, they’ve confirmed that they’re *not* rolling forward the home working adjustments, and a fresh claim must be made each year. This is more good than bad, as it avoids the risk of an inappropriate tax deduction being given for many years and then having to be clawed back by HMRC later when they realise. If you or your employees need to make fresh claims for 2021-22, here’s some more guidance:
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