Temporary tax and National Insurance exemption for coronavirus-related reimbursed home office expenses 15 May 2020 Financial Secretary to the Treasury, Jesse Norman, has confirmed that, in order to help employees working from home who have had to buy home office equipment as a result of the coronavirus crisis, and are reimbursed for it by their employer, there will be no associated tax and National Insurance (NI) liabilities to pay on those expenses.
This is a temporary measure and there are two conditions that must be met in order for the purchases to be eligible for the relief:
• The equipment must be purchased for the single purpose of enabling the employee to work from home due to the coronavirus outbreak • Providing the equipment would have been exempt from income tax should it have been provided directly to the employee by, or on behalf of, the employer The measure will take effect from the day after the regulations come into force, but HMRC will not collect tax and NI contributions on any reimbursed payments made on or after 16 March 2020, as this was the date that the government encouraged companies to allow their staff to work from home. The government plans to lay the statutory instruments to update these charges shortly.
The announcement has been made outside of the standard fiscal process to allow employers and employees to manage their work from home arrangements at the earliest opportunity.
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Temporary exemption to Income tax and NICs due on home office equipment due to COVID19 measures 1 June 2020
A temporary exemption will operate from 11 June 2020 and for the remainder of the 2020-2021 tax year
Employers may have asked employees to purchase equipment and materials to enable their home-office set up due to the Coronavirus lockdown measures, which require employees to ‘work from home where they can’.
Employers will benefit from a temporary lifting of a reporting measures for Income Tax and NICs where the following two conditions are met:
• Equipment is obtained for the sole purpose of enabling the employee to work from home as a result of the coronavirus outbreak
• The provision of the equipment would have been exempt from income tax under section 316 of ITEPA if it had been provided directly to the employee by or on behalf of the employer
Section 316 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) provides a tax exemption where an employer provides home office equipment directly and retains ownership of that equipment, and the employee’s private use is not significant.
This current exemption does not extend to employer reimbursements for employee expenditure on home- office equipment.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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