Over 80% of People Working from Home are Missing Out on Tax Relief

More than 8 in 10 people in Ireland’s new mobile workforce could be missing out on up to €100 per year by not claiming Work from Home tax relief.

This is according to the latest Taxback.com Taxpayer Sentiment Survey sought to understand the sharp underutilisation of the relief amongst those who work from home.

80% of People Working from Home Missing Tax Relief

The tax refund specialists also questioned the understanding of 1,200 taxpayers from their own database of how the relief works in practice, and it was found that the majority (77%) do not fully understand its application when it comes to a house-share situation.

Barry Cahill of Taxback.com spoke of the findings, “According to a Revenue Tax Strategy Group (TSG) paper on working from home released in 2021, 875,000 people are estimated as having been remote workers.

“However, just 90,000 people made a claim for tax relief for working from home expenses as of May this year – so just 10% of those who are eligible. In our own survey, only 17% of the respondents who work from home said they had claimed the relief.

“We have been advising any clients working from home to collate their bills and claim this relief. Anyone not doing so is missing out on ‘free money’, and while the amounts may be small, it’s hard to understand why anyone would not want this money in their pocket instead of leaving it with the taxman.”

The Taxback.com survey asked:

Of those who have worked from home – have you claimed the working from home tax relief?

– No I don’t claim/ haven’t claimed the relief (42%)

– No, I haven’t claimed because I don’t really know how to (33%)

– No, I haven’t claimed – no intention to do so (8%)

– Yes, I have claimed (17%)

Remote working relief allows people to claim for tax relief of 10% of the cost of electricity and heating incurred and 30% of the cost of broadband occurred – apportioned over the number of days a person worked from home over the course of the year.

If someone lived in a rental property with other people i.e., a house or apartment share, how do you think this would work?

– Anyone working from home is eligible for the full relief on the total cost of utilities, regardless of their accommodation type (29%)

– The relief is only available to the person whose name is on the bills (27%)

– You’d only get relief on your share of the bills i.e., if you live with 4 people, you’d only get relief on a quarter of the costs (23%)

– The relief isn’t available to people in a house share set up (21%)

Mr. Cahill went on to explain, “Most people (77%) in our survey did not know that relief can be claimed on their share of the bills. In fact, almost half of those who took the survey believe the relief isn’t available to those in a house share and/or if their names are not on the bills in question.

“This is untrue. If you share your bills with someone else, the cost is divided between you, based on the amount paid by each person. With thousands of people in the working from home brigade sharing their accommodation with others, eligibility for this relief for people in this scenario is likely to be commonplace”.

How it Works

Taxback.com advise that remote workers are entitled to a tax-free payment of €3.20 per day from their employer to cover the additional costs of their utility and broadband bills.

For those whose employers have not been in a position to make this payment, a claim on Remote Working relief allows people to claim back a portion of their utility and broadband bills for each day they work from home.

Specifically, 10% of the cost of electricity and heat incurred and 30% of the cost of broadband incurred. These costs are apportioned based on the number of days that you worked at home during the year.

Mr. Cahill explained, “Say, for example, someone started working from home full-time at the start of the pandemic (March 2020) and remained at home working full-time for the rest of 2020.

“They would have worked from home for 210 days (42 weeks X 5 days). Their utility bills and broadband bills would have to be apportioned out so that they could decipher their deductible costs.”

Mr. Cahill spoke of their hope that Government might look at increasing the relief available to workers in 2022,

“Unfortunately, the value of claiming remote worker relief compared to being paid the €3.20 per day by the employer is significantly lower.

“If we take a person working from home for 210 days with broadband and heating bills of €3,000 as an example. The €3.20 per day would be worth €672 to that employee whereas if they were to claim remote worker relief it would be worth less than €100.

“This is an area we’d like to see the Government reconsider in 2022 and move toward a simpler form of tax relief – perhaps similar to flat-rate expenses.”