Working from home – WFH – has become a reality for millions of people since Covid turned the world upside down.
It has positives and negatives. Some people miss the camaraderie of the office, where banter and a shared purpose mean motivation and job satisfaction.
On the other hand, very few people miss the daily slog to and from work.
But what about the financial impact?
At Continuum we have prepared a WFH checklist – to help you see if working from home could leave you better off.
Check how you save on travel
Savings on the daily commute to the office can be substantial. If you take the train, its easy to see the savings in the cost of the season ticket that you no longer need – which can be several thousand pounds a year, depending on how far you have to travel.
If you drive, you will be saving on the ever-growing cost of fuel, on parking, and on wear and tear on your car. Again, the bill will probably be in the thousands. If you need a second car in your household just to get to work, you might be able to get rid of it, saving the finance costs too.
If you only travel to work for part of the week you still save direct costs. Some train operators offer carnet tickets that give you savings on regular fares, but let you travel only when you want to.
Check your bills
Of course, there are some extra costs from working at home. Heating and lighting, and power for your computer are paid for by your employer when you are in the office.
If you work from a home which would otherwise be empty, your energy bills will increase.
Check your food costs
You may make savings on lunch – and possibly breakfast, if you stop off for coffee and a croissant or similar on your way in to work. Make yourself a sandwich at home with some leftovers, and the costs are negligible. Of course, if you add snacks to your weekly supermarket trip your budget may suffer.
Check your tax
If you are an employee and told to work at home by your employer, you can claim working from home tax relief. This could reduce your Income Tax this year by up to £125.
It is a little complicated (as are many tax arrangements).
From 6 April 2020, employers have been able to pay towards your working at home costs. The amount allowed does not sound that generous. The taxman is allowing an extra £6 a week without demanding evidence of increased bills.
However, employees who have not received the working from home expenses payment direct from their employer can apply to receive tax relief from HMRC instead.
You can claim tax relief based on the rate at which you pay tax. For example, if you pay the 20% basic rate of tax and claim tax relief on £6 a week, you receive £1.20 a week in tax relief (20% of £6 a week).
Higher rate taxpayers receive £2.40 a week (40% of £6 a week).
Over the course of the year, this could mean reducing tax bills by £62.40 or £124.80 respectively, and HMRC will accept backdated claims for up to 4 years.
Check how we can help
If you have questions about money matters and especially about tax, it pays to get some expert help.
At Continuum we provide the expertise you need.
Why not call us for a free initial chat?
The Financial Conduct Authority does not regulate taxation advice.
The levels, bases and reliefs from taxation may be subject to future change.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice, you should seek independent financial advice before embarking on any course of action.