Explainer: How to claim ‘work from home’ tax relief

If you are one of the 700,000 employees now working from your home office, kitchen table or indeed bedroom, you could be entitled to claim the e-workers tax relief.

In other words, you could get back some of the costs of utility bills and other expenses you have incurred, such as heating, electricity and broadband.

Irish people are quite poor at claiming tax refunds – so we asked Marian Ryan, Consumer Tax Manager with Taxback.com for some advice on how you can get back what you’re owed.

Am I considered an e-worker?

You are considered an e-worker if you work at home on a full or part-time basis and you either log onto a work computer remotely – or you develop ideas, products or services remotely.

According to Ms Ryan, it’s important to note that you will not be considered an e-worker if you bring work home outside of normal working hours.

“There must be a formal agreement between you and your employer that allows you to work remotely,” she explained.

Are there different types of e-worker reliefs?

There are two financial reliefs that e-workers should be aware of.

Firstly, your employer can make a voluntary payment to you of €3.20 per workday without deducting any PAYE, PRSI or USC.

This payment is intended to cover expenses such as heating and electricity costs.

However, Ms Ryan explained that there is no obligation on the employer to make this payment.

“Many employers are not in a financial position to provide their employees with this relief.”

Just 5% of employers of Ireland’s remote workforce are paying this tax-free expense, according to a recent survey from Taxback.com.

So, if you are an e-worker and your employer is not paying you the tax-free amount of €3.20 per day, you can claim the e-worker tax relief from Revenue instead.

What do I need in order to claim e-worker tax relief?

In order to claim the e-worker tax relief you must submit a number of documents to Revenue.

You will need a letter from your employer confirming that you are an e-worker.

You will also need copies of all utility bills relating to the time-frame that the relief is being claimed for, so in this case for 2020.

According to Ms Ryan, the process is a “little arduous”, due to all the paperwork required.

How much money will I get back?

You won’t get a huge amount of money back, but every little helps.

Ms Ryan said the amounts paid out are quite low – on average between €20 – €60.

This is because Revenue will assume that 90% of your expenses are for personal use.

According to Revenue, you will get up to 10% of your electricity and heating expenses as an e-working expense.

This is calculated based on the number of days worked at home over the year and you will not receive money back for days you did not work.

In relation to broadband costs, you will get back up to 30% of your bill; again, this is calculated on the number of days you worked remotely.

How do I calculate e-working costs?

To calculate how much of your electricity and heating bills you will get back under the e-working relief, you should multiply your allowable utility bills by the number of days worked from home, divide by 365 and multiply by 10% (0.1).

You should follow the same process to work out how much of your broadband costs you will get back.

Again, multiply your bill by the number of days worked from home, divide by 365 and in this case multiply by 30% (0.3).

If the cost is shared between two or more people, it should be divided up based on the amount each paid.

Note, these calculations will automatically be carried out on the Revenue website when you input the relevant information during the application process.

Can you show me some examples?

The following are some examples from Revenue.

Niamh worked 180 days in total in 2020 – she worked 90 of these days from home and paid €2,494 for the year for heating and electricity.

In 2020, Rob and Mark worked at home in their shared house while their offices were closed due to the Covid-19 pandemic.

Since April 2020, they both worked remotely for 181 days.

Their cost for their electricity and heating for 2020 was €1,200.

Their broadband cost was €359.88.

They split the bills equally between them, and each calculated the portion they can claim.

Is it worth claiming the e-worker relief?

While the amount of money you will receive under the e-working relief may seem low, applying for it could be the push you need to apply for other tax reliefs that you are eligible for – which will all add up.

According to Marian Ryan, research from Taxback.com shows that 6 in 10 people do not claim on a yearly basis, and more than 3 in 10 have never claimed at all.

What other reliefs might I be able to claim?

While applying for the e-worker relief, Ms Ryan said she would encourage people to check out the below reliefs.

Help-to-Buy Scheme:

Increased income tax relief for the Help-to-Buy Scheme – €30,000 (up from €20,000), or 10% (up from 5%) of the purchase price of a new build.

Buyers can now max out on this grant on €300,000 homes, rather than the previous amount of €400,000.

Cycle to Work Scheme:

This has increased from €1,000 to €1,250 (€1,500 for electric bikes).

Taxpayers may now avail of the exemption once in any four-year period (previously a five-year period), so those who bought a new bike in 2016 or before can upgrade again now.

Medical Expense Relief:

Research from Taxback.com shows that only approximately 4 in 10 Irish people claim tax relief on the cost of their medical expenses.

If you have paid for eligible health expenses you will be entitled to claim relief at your standard rate of tax – 20%.

Day to day medical expenses such as doctor’s visits and prescription fees are often overlooked but can equate to a substantial amount over the course of a year.

Flat Rate Expense Relief:

This is a type of tax relief for PAYE workers in specific trades and professions, whereby a person can reduce the amount of taxable income they have each year on the cost of certain expenses.

The amount that can be claimed depends on the job because the rates are set by Revenue each year for various classes of employee.

A full list of jobs and associated reliefs can be found online at Revenue.ie.

Over 180 different occupations are entitled to flat rate expenses of varying amounts between €21 to €2,476 per year with an average of €247 per year.

Workers should note however, that flat rate expenses are not automatically deducted from pay so you have to be proactive and claim them yourself.

Home Carer Tax Credit:

Home Carer Tax Credit can be claimed by any housewife or househusband caring for their own children.

The value of the credit for 2020 is €1,600.

It can be claimed either if the spouse is at home full time, or if the spouse works part time and earned less than €10,400 in 2020.

If you earn between €7,200 and €10,400 you will get a portion of the tax credit.

Tuition fees:

If you are paying for tuition fees for a full or part-time third level course, be it for yourself or for your child, then you may well be entitled to tax relief on the cost.

Nursing Home Relief:

Anyone paying nursing home fees, either for themselves or for someone else, is eligible to claim relief at their marginal rate of tax.

A person can claim up to 40% relief on nursing home or home care costs, up to a maximum of €75,000.

Rent a Room Relief:

Where an individual lets a room in his or her sole or main residence as residential accommodation, the income may be exempt from income tax where the aggregate of the gross rents received in connection with the letting is below a certain threshold (€14,000).

AirBnB type income will not qualify for Rent a Room relief.

Single Person Child Carer Credit:

If you care for a child on your own, you may be able to claim the Single Person Child Carer Credit.

This can be any child that you support and maintain at your own expense.

The value of this tax credit is €1,650 per year.

This will reduce the tax you pay by €31.73 per week.

You will also be entitled to an increased rate band of €4,000.

Dependent Relative Credit:

If you’re caring for a dependent relative you may qualify for this tax credit.

How do I claim for 2020?

You can upload receipts and bills paid in 2020 using the Revenue Receipts Tracker App or the Receipts tracker on MyAccount.

The information uploaded will then be available in your 2020 Income Tax return.

You must complete your 2020 income tax return in order to claim reliefs.

You can find all the details on the Revenue website.