Chris Etherington, a tax specialist from RSM, has highlighted the need for HMRC to revamp its eligibility checks for the tax relief scheme for home workers. According to Etherington, many individuals who are currently claiming the relief may no longer qualify for it, resulting in a significant cost to taxpayers. He urges HMRC to urgently address its internal processes to rectify this issue.
Etherington explains that the tax relief code is still present on the PAYE slips of some clients, allowing them to benefit from the tax break even though they have returned to working in the office. This inconsistency in the system is leading to many individuals continuing to take advantage of the relief, resulting in substantial financial implications for the Exchequer.
James Vitali, from the think tank Policy Exchange, also voices concern over the disproportionate benefits received by those working remotely. He believes that tax relief should be distributed fairly, regardless of the work environment.
The home working tax relief scheme has been in place since 2003, aimed at helping individuals cover the additional costs incurred while working from home, such as electricity, gas, and internet bills. During the pandemic, HMRC simplified the claiming process to accommodate the increased number of individuals working from home due to lockdowns.
This change resulted in almost six million people claiming the relief between 2020 and April of this year, costing the taxpayer approximately £500 million. This is a significant increase from the 22,000 individuals who claimed the relief annually before the rules were relaxed. HMRC, however, announced last April that the eased rules would end.
Criticism of HMRC and the home working relief comes at a time when many tax office employees themselves are continuing to work from home. According to HMRC data, on average, only 47% of staff were working in the office in June. This number dropped to as low as 11% in February of last year. In July, it was revealed that Britain has the highest percentage of individuals working from home compared to other European countries.
An HMRC spokesperson acknowledges that the number of people claiming the relief is expected to remain higher than pre-pandemic levels.
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