HMRC relax position on reimbursement for office equipment

The Association of Taxation Technicians (ATT) welcomes the announcement by the Government yesterday (Weds) that rules restricting reimbursement of expenditure on office equipment are to be relaxed for the 2020/21 year. This should help to prevent employees getting hit with a tax bill because they are forced to work from home as a result of Covid-19 restrictions and make sure that they are not left out of pocket.

Many people can expect to work from home for a substantial period of time and it is likely that they will need additional equipment including monitors, keyboards and even desks and chairs in order to create a functional office space.

Fortunately, after an announcement on 13 May 2020 by the Financial Secretary to the Treasury,¹ some of the unintended tax outcomes which could arise where employers reimburse employees for the cost of these items are to be addressed by the Government.

Jeremy Coker, President of the ATT, said:

“In the current circumstances, some employees may have purchased equipment at their own cost in order to homework as quickly and effectively as possible. Employers may even advise this and offer to reimburse their workers for the costs afterwards.

“Such reimbursement of the cost of office equipment would under existing rules be taxable and result in a tax bill for the employee. This is clearly unwelcome, and the announcement of a temporary exemption from income tax and national insurance for such reimbursements is fair and very welcome.”

The new rules will provide a temporary relaxation for 2020/21 (and also by discretion, the period 16 March 2020 to 5 April 2020 when most homeworking will have started because of Covid-19) where employers reimburse their employees for the cost of equipment which was:

• purchased for the sole purpose of enabling homeworking as a result of Covid-19 restrictions;
• and which would have been tax exempt if provided directly by the employer.

Further details of the relaxation of the rules are expected from the Government later this month. 

Notes for editors

1. The announcement by the Financial Secretary to the Treasury was made on 13 May.
2. Details of other homeworking allowances and reliefs can be found on the ATT website.