Claiming tax relief when working from home in Ireland

Since March, thousands of workers are working from home for the first time and may be unaware of tax relief available on home expenses.

The Office of the Revenue Commissioners allows employees working from home to claim €3.20 per day in expenses if duties are performed within normal working hours.  If an employer is not in a position to pay the €3.20, these expenses are eligible for tax relief meaning the ‘home-worker’ can claim tax back on them.

Read on for a summary of required conditions and supports available.

e-Working is defined as when an employee

• works at home on a full- or part-time basis
• part of the time at home and the remainder in the normal place of work.

e-Working involves:

• logging onto a work computer remotely
• sending and receiving email, data or files remotely
• developing ideas, products and services remotely.

Note that the following applies only to e-working employees and not to workers who bring work home outside of normal working hours.

Home Expenses

If an employee is working from home, they may be eligible for tax relief on expenses like light, heat, telephone and internet usage.

Required Conditions

An employer can make the payment of €3.20 per workday tax free when:

• there is a formal agreement between employer and employee that the employee is required to work from home
• the employee is required to perform essential duties of the employment at home
• the employee is required to work for substantial periods at home.

• Payment of €3.20 per day

An employer can make a payment of €3.20 per workday to an e-Working employee without deducting Pay As You Earn (PAYE), Pay Related Social Insurance (PRSI) or Universal Social Charge (USC).

• Payment greater than €3.20 per day

The employee’s costs might be higher than €3.20 per workday and the employer may repay these expenses.  If the employer pays more than €3.20 per day to cover employee expenses, the employee pays tax, PRSI and USC as normal on the amount above €3.20. Records of the payments made must be retained by the employer.

• Where no expense payment is made by the employer

When an employer does not pay the employee an allowance for expenses, the employee can make a claim for tax relief at the end of the year. In this case, the employee will get money back from the taxes paid.

In this case claims made may need to be supported with evidence in the form of receipts and possibly a letter from the employer stating that the employee does, in fact, work from home and that these expenses are not reimbursed by the employer.

Equipment and facilities

The employer may provide any of the following to an e-Working employee for business use:

• computer or laptop
• printer
• scanner
• software to allow you to work from home
• telephone, mobile and broadband
• office furniture.

This is not a Benefit-in-Kind where private use by the employee is minimal.

This means that the employee does not have to pay any tax for receiving the equipment from their employer.

Capital Gains Tax (CGT)

If the employee uses only part of the home for e-working, the home remains the Principal Private Residence and the employee is not liable for CGT when it is sold.

Local Property Tax (LPT)

An e-Working employee will not receive a reduction on LPT due if they use a room in their home to carry out work-related activities.

Further reading:

Revenue.ie: e-Working and Tax Part 05-02-13 [pdf]

If you wish to discuss any of these issues contained in this article please call us on 0818 303087. Alternatively, you may email us at advice@avidpartners.ie.

We look forward to assisting you with your business.