working from home tax credit?
- Thread starter Ndiddy
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Revenue are taking the Mick when it comes to the amount an employer is allowed to cover (3.20) for working from home expenses vs an what employee is allowed to claim from Revenue. Using Revenue's example in section 2.4 of Tax and Duty Manual Part 05-02-13, they would allow up to a €288 payment from an employer for 90 days e-workong, compared to €43 for a claim by an employee for the same period.
I welcome the fact that Revenue have provided clear guidance on how to calculate a claim, however it's not clear why there would be such a large variance between the two scenarios.
Furthermore, in my view, only allowing 10% of the utility bills to be attributable for the working days is laughable. In my situation, most of the heat and light would be used during a working day at home (an extra 8 hours) in order to be comfortable. Its unreasonable to assert that only an office space can be considered and not common areas such as bathroom and kitchen, which should also be lighted and heated appropriately during a working day.
I welcome the fact that Revenue have provided clear guidance on how to calculate a claim, however it's not clear why there would be such a large variance between the two scenarios.
Furthermore, in my view, only allowing 10% of the utility bills to be attributable for the working days is laughable. In my situation, most of the heat and light would be used during a working day at home (an extra 8 hours) in order to be comfortable. Its unreasonable to assert that only an office space can be considered and not common areas such as bathroom and kitchen, which should also be lighted and heated appropriately during a working day.
torblednam
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Well as you said yourself what you’ve been given is guidance, it’s up to you to vouch whatever claim you ultimately choose to make. The guidance is simply setting out the broad rationale, and that they aren’t going to quibble or query relatively low value claims.
If you’re living alone then you may be correct. My wife and kids have been here using the great majority of the light & heat in the house, throughout the last two months. The incremental utilities I've used directly attributable to my working here, probably aren’t even 10%.
Consider this also: what was the alternative, during lockdown, to you working at home? If the answer is at home, not working, then how much is the incremental cost of light & heat through the fact that you were working while at home on lockdown, if you would otherwise have been there anyway...
100% agree with that statement, however we also have to look beyond the current lockdown. In my own case, for the whole of 2019 I worked from home office 2 days per week, and I will be continuing to do so after the lockdown. So for myself, it's not an insignificant cost to give consideration to, and accumulated over a couple of years, it is quite a lot of extra cost.
It should also be pointed out that you can only claim this tax credit if your employer has left you with no choice but to work from home.
If you choose to do so, for convenience, you are not entitled to the credit . ( all employees working from home because of COVID-19 are deemed to be entitled).
If you choose to do so, for convenience, you are not entitled to the credit . ( all employees working from home because of COVID-19 are deemed to be entitled).
That's not true at all, this tax credit existed before covid-19. From Revenue:
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I know it has always existed. Nowhere in my post did I say it was new .
It is only applicable if you have to work from home , not if you choose to .
Revenue have stated that everyone working from home because of Covid 19 is deemed to be entitled as this is not by choice . I think I was clear
It is only applicable if you have to work from home , not if you choose to .
Revenue have stated that everyone working from home because of Covid 19 is deemed to be entitled as this is not by choice . I think I was clear
torblednam
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OK there’s a couple of things that need clearing up:
Firstly there is no tax credit in relation to this.
There’s a Revenue concession allowing employers to make a payment of UP TO €3.20 per day worked at home to people who qualify as e-workers, tax free. Presumably, there’s a government policy of encouraging the promotion of e-working lurking somewhere, which this concession was introduced to support.
In some cases an e-worker’s employer may choose not to make a tax-free payment as set out above, or they might only pay a small fraction of the maximum allowable of €3.20.
Regardless of the foregoing, every person in employment has a statutory right (under section 114 of the Taxes Consolidation Act 1997) to claim a deduction from their taxable income in respect of amounts incurred wholly, exclusively and necessarily in the performance of the duties of their employment. That’s got nothing to do with e-working though, it’s a much broader and older provision. If you have to use your car for your employment but your employer doesn’t pay mileage, or if you have to travel away overnight and they don’t reimburse you the cost, it is this provision that allows you tax relief on those expenses.
There is a body of case law dating back over 100 years in relation to the statutory tests of “wholly, exclusively and necessarily” and these words are described as “notoriously rigid, narrow and restricted in their operation” in one often quoted UK judgement.
Therefore, where a taxpayer makes a claim under this heading, it is these statutory tests that must be met. As I stated previously, the 10% figure was given as a guideline to what Revenue will consider reasonable without challenge (although in any case, there’s a requirement to retain records so that it can be evidenced what your claim is 10% of). If you’re satisfied your additional expense is demonstrably greater then you’re free to claim accordingly.
Finally, in relation to working from home 2 days a week, unless this a formal arrangement and not something you simply have a choice or flexibility around, then it wouldn’t qualify as e-working.
Firstly there is no tax credit in relation to this.
There’s a Revenue concession allowing employers to make a payment of UP TO €3.20 per day worked at home to people who qualify as e-workers, tax free. Presumably, there’s a government policy of encouraging the promotion of e-working lurking somewhere, which this concession was introduced to support.
In some cases an e-worker’s employer may choose not to make a tax-free payment as set out above, or they might only pay a small fraction of the maximum allowable of €3.20.
Regardless of the foregoing, every person in employment has a statutory right (under section 114 of the Taxes Consolidation Act 1997) to claim a deduction from their taxable income in respect of amounts incurred wholly, exclusively and necessarily in the performance of the duties of their employment. That’s got nothing to do with e-working though, it’s a much broader and older provision. If you have to use your car for your employment but your employer doesn’t pay mileage, or if you have to travel away overnight and they don’t reimburse you the cost, it is this provision that allows you tax relief on those expenses.
There is a body of case law dating back over 100 years in relation to the statutory tests of “wholly, exclusively and necessarily” and these words are described as “notoriously rigid, narrow and restricted in their operation” in one often quoted UK judgement.
Therefore, where a taxpayer makes a claim under this heading, it is these statutory tests that must be met. As I stated previously, the 10% figure was given as a guideline to what Revenue will consider reasonable without challenge (although in any case, there’s a requirement to retain records so that it can be evidenced what your claim is 10% of). If you’re satisfied your additional expense is demonstrably greater then you’re free to claim accordingly.
Finally, in relation to working from home 2 days a week, unless this a formal arrangement and not something you simply have a choice or flexibility around, then it wouldn’t qualify as e-working.
Hooverfish
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I've used differing bills from periods working fulltime from home v fulltime in the office to prove a higher expenses percentage in the past, but it is extremely time-consuming for the sums you get back. I do hope the government is going to look at this, as implied by Varadkar recently.
That's no true at all. If you choose to work from home, then you are working from home and you are entitled to claim. It's quite clear, in the manual, that if you have an arrangement to work from home on either a part or full time basis, then you are a "e-working"
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Yes, in my company it is a formal arrangement, documented and approved by HR and so on. This has been my arrangement for a number of years and I have claimed for 2018, but not for 2019 yet. Difficult enough as you say.
I take umbrage with the fact that a payment of up to 3.20 would be extremely generous but you would have a hard time if you were to claim anything close to that from Revenue. Why such a discrepancy?
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How much heat are you using? I haven't turned the heating on once during the day in the last two months.
You can't claim for kitchen or bathroom costs because cooking or going for a **** aren't related to your job. The same way you can't claim for buying food or clothes.
In the depths of winter, it would be on all day when working from home. Lights on as well.
torblednam
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Well on the one hand there is an incentive to promote something the State considers desirable (getting more of the workforce out of the daily commuting grind and reduce strain on public transport / carbon footprint and all these good things). This is only effective as an incentive if it amounts to something that is deemed worthwhile... €3.20 a day equates to €16 per week, so it looks like someone sat down and worked out that number from some kind of calculation somewhere along the way.
On the other hand is the application of a broad tax provision which is blind to whether the person claiming a deduction is an e-worker or any other kind of worker.
I am working at home since March and likely to be stuck doing so full time until at least the end of the summer; it doesn't particularly suit me with small kids cooped up here pretty much 24/7, so I'll be back to the office in a flash as soon as I'm allowed, and whilst my employer doesn't pay any e-worker allowance I don't think €3.20 a day would alter my outlook!
I'll fire in my claim under s.114 after the end of the year, and for 5 months it'll probably net me less than €60, but I can't find it in me to begrudge, or take umbrage with, the existence of a relatively generous but still quite modest alternative that is available to others. Particularly since any modest increase in utilities is more than offset by the savings from not commuting or eating out etc. I expect that’s true for an awful lot of people.
torblednam
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I actually knew that you would throw a similar figure out, but it’s flawed logic. For starters, a lot of people might be able to do a lot of their work remotely, 1 - 3 days per week, but not everything. So, for the majority of people, it’s some fraction of that.
Anyway, what are you comparing it to? What point are you trying to make about it? That employers shouldn’t be allowed to pay that much, or that employees shouldn’t be allowed to be paid that much, tax free? Smacks of begrudgery really tbh unless / until you can expand on your ideological opposition to it?
It’s also a totally separate issue to the tax relief, which is based on the actual costs incurred by each individual based on the facts & nature of their own employment. You are hardly opposed to the tax relief applying a deduction for the expenses incurred?
A tax credit as suggested by Sunny might be simpler, in theory, but the devil is in the detail.
torblednam
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What tax credit, there is no tax credit!
It's not flawed at all, I was quoting the figure at the higher end. That was clear in my example (200 days). At the lower end (e.g. 1 day per week, or 40 days per year to keep in line with my previous example), the amount is 128 euro net per year. Some people will get more, some people get less, depending on number of days they work from home. Nothing flawed about that.