Revenue update on tax reliefs for e-working

Revenue have recently updated their guidelines on e-working and the treatment of associated expenses for remote workers. COVID-19 could result in a long-term change to the work practices of many organisations so it is important to be aware of the tax reliefs available for people working remotely.

The update clarifies that where the government recommends that employers allow employees to work from home to support national public health objectives, as in the case of COVID-19, the employer may pay the employee up to €3.20 per day to cover the additional costs of working from home. 

If the employer does not make this payment, the employee may be entitled to make a claim in respect of vouched expenses incurred wholly, exclusively and necessarily in the performance of the duties of their employment.

If the employee makes such a claim, any reimbursement of expenses by the employer, such as the daily allowance of €3.20 referred to above, must be deducted from such a claim by the employee.

In essence this will permit employees forced to work from home for 'substantial periods' due to the current COVID-19 crises to claim for a tax credit. 

The conditions where Revenue allow relief of home expenses for e-working are where:

• There is a formal agreement in place between the employer and the employee under which the employee is required to work from home on a full- or part-time basis
• An employee is required to perform substantive duties of the employment at home. These involve:
  • logging onto a work computer remotely
  • sending and receiving email, data or files remotely
  • developing ideas, products and services remotely
• An employee is required to work for substantial periods of time outside the normal place of work

e-Working calculation for claim by employee
Revenue provide the following example:

Eve works 180 days in total during the year, and 90 of these days are from home. The annual amount paid on allowable utility bills (heating and electricity) is €1,750.

The portion of utility bills that applies to e-working days is:

Allowable utility bills x no. of e-working days
365 days

(€1,750 x 90) / 365 = €432

This amount (€432) should then be apportioned between use for employment purposes and private use.

Revenue are willing to accept that the average proportion of the house attributable to a home office is 10%. Therefore, in this example the amount of e-working expenses that would be “allowable deductions incurred in employment” is €432 x 10% = €43.00 (this is the e-working expense amount due).

Method of claiming e-working expenses by employees
e-Working expenses can be claimed by completing an income tax return, which an employee can complete from the Revenue website by taking the following steps:

• Sign into myAccount
• Click on ‘Review your tax’ link in PAYE Services
• Select the Income Tax return for the relevant tax year
• In the ‘Claim for Tax Credits, allowances and Reliefs’ page select ‘Allowable Deductions incurred in Employment’ and insert the amount of expense at the 'Amount' section

As a claim may be selected for future examination, all documentation relating to a claim should be retained by the employee for a period of six years from the end of the tax year to which the claim relates.

If you would like further details on this or any supports available, please contact a member of our tax team.