As we head into the colder months and the government's advice to "work from home if you can" continues to ring in our ears, questions about utility bills are rearing their heads.
In normal years and under normal circumstances, the increase in a heating or electric bill is offset by the fact that many of us spend our workdays in heated offices. As that's not going to be the case for many this year, the question becomes: can you ask your employer to pay for your heating?
Well...yes and no. There is government relief you can apply for (more on that later) but if you want to go through your employer, things are a bit more complicated.
According to Charles Cotton, senior policy advisor at the Chartered Institute of Personnel and Development (CIPD), the UK's professional body for HR and people development, for an employer to increase your pay to accommodate increased bills could require changes to contracts. From a legal standpoint, these changes cannot be made on a case-by-case basis. "Most alterations of terms and conditions require employees’ consent and altering pay without this will be a breach of contract leading to claims including unfair dismissal."
All of which is to say that they cannot make these changes without your consent. While a pay increase would likely receive an enthusiastic 'yes' from employees, that decision is entirely at the employer's discretion. As Charles says: "Due to the economic pressures on many employers, they can decline any requests to reimburse employees for these home expenses."
However, if an employer requires employees to work from home, tax relief can be given for the additional costs. It's important to bear in mind that this is only when you have no choice but to work from home, not if it's by choice. "The rules mean that effectively a tax-free payment equivalent to about £300 per year can be made to cover increased costs for working from home," says Charles. He adds: "HMRC guidelines allow employers to offer tax-free payments to workers who regularly work from home and it has been confirmed by HMRC that this applies to those working from home during the pandemic."
So what does this cover? It is strictly within the parameters of use for business only. This means that rent or internet costs do not count as they are both a personal and a business cost. However it does account for:
- additional gas and electricity costs while the room is being used for work
- metered costs of water used (a few cups of coffee is unlikely to be substantial)
- cost of work-related telephone calls.
Because establishing these expenses is difficult, HMRC accepts a flat rate allowance of £6 per week or £26 per month (pre-tax) without evidence to support the actual costs. Employees with provable higher costs can claim more if they have evidence of the actual costs incurred. What you will actually get as a basic rate tax payer is about £1.20 per week; if you're a higher earner it will pay about £2.40.
While the employer can claim this on your behalf and pay it to you, you can also bypass your employer and claim back that sweet £1.20 a week yourself directly from HMRC. As of October this year you can go through a specially built portal, avoiding the mess and complications of receipts and calculations.
The interim director general of customer services at HMRC, Karl Khan, previously told The Guardian: "Once the application has been approved, the portal will adjust an individual’s tax code for the 2020-21 tax year. The employee will receive the tax relief directly through their salary and will continue to receive the adjustment until March 2021."
If you're self-employed, you're entitled to claim more. Per the government website, your claim can include a proportion of lighting, heating, cleaning, insurance, mortgage interest, council tax, water rates and general maintenance costs. These expenses arising from working from home are deducted, reducing the final bill. Expenses are worked out by assessing the amount of time the home is used for work, and how much of the home is being used.