Responding to COVID-19: an e-working update from Revenue

05 November, 2020

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.

A photo of a stone-built gazebo in Stephen's Green park in Dublin city.

Who is an e-worker?

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.

Treatment of expenses of an e-worker

Relief for home working expenses is available for an employee in one of two ways:

  • A tax-free payment by the employer of €3.20 per workday; or
  •  A claim for tax relief to Revenue for the expenses incurred as a result of working from home

What expenses can be claimed via the employee's tax return?

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:

  • 10% of the cost of electricity and heat; and
  • 30% of the cost of broadband

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.

Example

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:

  • heating and electricity = €1,950 and
  • broadband = €625

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

How to claim expenses via tax return

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.

Computer and office equipment

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.

What next?

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.

We are here to help you

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.

Contact us

Pat Mahon

Partner, PwC Ireland (Republic of)

Tel: +353 1 792 6186

Anne Bolster

Director, PwC Ireland (Republic of)

Tel: +353 1 792 6209

Follow PwC Ireland