Tax implications of working from home

03/19/21 • 6 min

HMRC guidance sets out that if an employee is working from home due to COVID-19, a homeworking arrangement will exist for this period.
Employees working from home regularly therefore may be able to benefit from certain tax exemptions, although this cannot be where they are working informally. HMRC guidance has confirmed that if an employee is working from home due to COVID-19, the definition of a homeworking arrangement for tax purposes, will be met for this period.
Senior Solicitor Georgia Roberts discusses how employees working from home regularly may be able to benefit from certain tax exemptions.
For specific advice on contractual place of work, please get in touch with our employment lawyers.

Previous Episode

How to avoid IR35 penalties

On 15 February 2021 HMRC published its policy paper explaining how it intends to help and support organisations which must comply with changes to the off-payroll working rules (IR35). The IR35 rules will apply to all medium and large sized businesses in the private sector with a UK connection from 6 April 2021. The policy paper sets out HMRC’s compliance principles and when HMRC is likely to investigate suspected tax avoidance. It contains examples and helpful links to further HMRC guidance.

HMRC clearly recognises the complexities faced by organisations now having to prepare for IR35 rules. It promises to help “customers trying to do the right thing” and work with those who make genuine mistakes about the employment status of the individuals they contract with through personal service companies. HMRC has reiterated its pledge that in the first 12 months it will not impose any penalties for inaccurate status determination statements, providing that ‘all reasonable care’ has been taken. This penalties exemption will not apply where there is deliberate non-compliance or fraud.

While this supportive compliance regime is to be welcomed businesses should not be complacent. Genuine mistakes will not be penalised but they may not be forgotten either. If HMRC identifies mistakes in the way a business has applied the off-payroll working rules HMRC will expect it to ‘self-correct’. And HMRC may do follow-up checks by reviewing available data such PAYE Real Time Information (‘RTI

Deborah Scales, employment solicitor explains the guidance.

Next Episode

Employee holidays abroad during COVID

With the summer months fast approaching and with the fatigue of more than a year of lockdowns weighing on us, many are hoping the second half of this year will provide ample opportunity to enjoy holidays abroad again.

Employers are advised to start thinking about how they will deal with annual leave requests and foreign travel.

With travel restrictions in place for most of 2020, many workers decided not to take annual leave, and instead carry over as much of their allowance as they could into 2021. Again this year, with the hope of foreign travel on the horizon, employees have likely been saving up annual leave to be used at a time when there is a chance to escape for sunnier climes.

Amanda Glover, Employment Solicitor at Clarkslegal answers the top questions on holidays this year for your employees.