As the COVID-19 pandemic continues, a significant portion of the Irish workforce remain working from home in support of the national public health objectives. In light of these circumstances, the Irish Revenue have enhanced the tax relief available to such e-workers for expenses incurred while working from home.
Employees working from home as a direct result of the COVID-19 pandemic will be considered e-workers while the Government recommendation to employers to encourage employees to work from home, where possible, remains in place.
Relief for home working expenses is available for an employee in one of two ways:
Existing Revenue guidance provided for relief on utility expenses incurred by e-workers, such as electricity and heat. However, in a welcome move by Revenue, they have confirmed that the cost of broadband can also be claimed. This concession, commencing in the tax year 2020, will apply for the duration of the pandemic.
An employee can claim:
To calculate the amount of tax relief that can be claimed, the total amount of these expenses in the year, must be apportioned based on the number of days working from home. If an expense is shared between two or more people, the cost should be apportioned based on the amount paid by each individual.
Joan works 230 days in total during the year and 150 of these days are from home. Joan's employer does not make a tax-free payment towards expenses.
Joan's utility bills are:
The total amount of e-working expenses that Joan can claim is €80 + €77 = €157.
As Joan pays tax at the higher tax rate of 40%, she will receive tax relief of €63 (€157 x 40% = €63).
|Heat and electricity||Broadband|
|Apportionment for days worked from home||€1,950 x 150/365 = €801||€625 x 150/365 = €257|
|Allowable expenses||€801 x 10% = €80||€257 x 30% = €77|
The e-working expenses can be claimed by completing a tax return. A 'Remote Working (e-working) Expenses' option has been added to the 'Tax Credits and Reliefs' page in myAccount to allow an employee to add the amount of allowable expenses.
The employee must have incurred the cost themselves and must retain proof of payment for six years from the end of the year of claim.
Relief cannot be claimed via an employee's tax return for capital items purchased such as laptops, computers, office equipment and furniture purchased by an employee. Under e-working arrangements the employer may provide equipment e.g. computers, laptops, office furniture etc and a benefit in kind charge will not arise provided the equipment is primarily for business use.
We await the report from the interdepartmental group tasked with developing the country's remote-working strategy. Further measures to support working from home arrangements, which are likely to continue for many months to come, would be very welcome indeed.
If you wish to discuss further please feel free to get in touch with your usual PwC contact or a member of the team listed below.