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Reimbursing expenses for home office equipment

HMRC has updated its guide for employers who have employees working from home due to the COVID-19 outbreak. This could be a result of the workplace being closed or because employees are following government advice to self-isolate.

The updated guidance reflects temporary changes to the rules for reimbursing employees for the purchase of office equipment whilst working from home. The guidance originally published on 26 March 2020 stated that if employers reimburse expenses for office equipment their employees have bought that this is taxable and should be reported on the employers PAYE Settlement Agreements.

In a written statement published on 13 May 2020, Jesse Norman, The Financial Secretary to the Treasury announced the introduction of a temporary measure to support employees who are working from home as a result of the pandemic. This temporary measure states that employer reimbursements for the cost of home-office equipment expenses will be exempt from tax and NICs.

The expenditure must meet the following two conditions to be eligible for relief:

  1. That equipment is obtained for the sole purpose of enabling the employee to work from home as a result of the Coronavirus outbreak, and
  2. The provision of the equipment would have been exempt from Income Tax if it had been provided directly to the employee by or on behalf of the employer (under section 316 of ITEPA).

The exemption is a temporary measure and will have effect from the day after the regulations come into force until the end of the tax year 2020/21. However, we are told that HMRC will exercise its collection and management discretion and will not collect tax and NICs due on any reimbursed payments made from 16 March 2020 (the date the government recommended working from home) to the date these regulations take effect.

Source: HM Treasury Wed, 27 May 2020 05:00:00 +0100

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