Government confirms tax exemption for home office reimbursements

The Treasury minister has confirmed that organisations who required staff to work from home during the COVID-19 crisis will not have to pay tax on any home office equipment reimbursements. 

The year-long exemption means employers will not have to pay tax or national insurance contributions (NIC) on reimbursements for staff who bought homeworking equipment specifically for this unexpected period.

Jesse Norman, The Financial Secretary to the Treasury, confirmed in a written statement that the measure is being legislated, and will come into effect from 16 March 2020 to 5 April 2021.

To qualify for the exemption, the office equipment must have been purchased for the 'sole purpose of enabling the employee to work from home as a result of coronavirus'  and subject to the proviso that private use is not significant. This could include office furniture, computer equipment and Internet access.

The normal procedure is that organisations account for tax and NIC on reimbursed expenses through a PAYE settlement agreement. ICAEW’s Tax Faculty and other professional bodies have been urging the government to make an exemption since the start of the lockdown, and welcomed the news.

Employers have a duty of care to make sure staff are set up comfortably with suitable equipment and healthy behaviours at home.