COVID-19 Update – 14 October – Allowance for working from home and pre-pack sales to face scrutiny

Allowances for working from home

HMRC has confirmed employees working from home can have £6 per week or £26 per month allowance paid tax-free by employers or, during the pandemic, can claim a deduction from earnings for this allowance.

This initiative is design to help employees cover the additional costs they have incurred due to working from home. Up until 5 April, 2020 employees can claim a fixed amount of £4 per week and then £6 per week thereafter. Alternatively, employees can claim relief on the actual amounts incurred, subject to being able to provide evidence, such as phone bills.

Employees who are not reimbursed by their employer can claim this allowance as a deduction from their earnings in their tax returns or via the government gateway to claim tax relief in-year for 2020/21 through their PAYE tax code. To find out which route to use, visit HMRC’s new online claims checker.

It has been confirmed that the £6 per week/£26 per month is available in full, even if an employee splits their time between home and office: ie it does not need to be pro-rated over the number of days spent each week at home and in the office.

Pre-pack sales to face mandatory independent scrutiny

The government has confirmed new laws will require mandatory independent scrutiny of pre-pack administration sales where connected parties are involved in the purchase.

The new laws are designed to help improve confidence and transparency in pre-pack administration sales, giving the general public and creditors reassurance that their interests are being protected alongside that of the distressed business.

Further details on how mandatory scrutiny will be enforced will be provided in due course.