Expenses and benefits: homeworking
What to report and pay
If any of the homeworking expenses you cover are not exempt from tax, you may have to report the costs to HM Revenue and Customs (HMRC), and deduct or pay tax and National Insurance on them.
Equipment, services and supplies
If you provide these for both business and private use, you must:
- report it on form P11D
- pay Class 1A National Insurance on the value of the benefit
If you let your employee keep equipment you provided during coronavirus (COVID-19) you need to record it as an employee benefit. The charge will be on the market value of the equipment at the time you agreed the employee could keep it minus any amount the employee paid towards it.
Additional household expenses
If you cover any costs over the weekly limit (£6, or £26 a month for employees paid monthly), you need to be able to prove that the payments are no more than your employee’s additional household expenses.
If the payments you make are more than your employee’s additional household expenses they count as earnings, so you’ll need to:
- work out the excess and add this to your employee’s other earnings
- deduct and pay PAYE tax and Class 1 National Insurance through payroll
Expenses related to COVID-19
You can report any expenses or benefits related to COVID-19 on your PAYE Settlement Agreement.
If you are providing any non-cash benefits (‘benefits in kind’) through payroll you can continue to report expenses and benefits in this way. You can also continue to report expenses and benefits through a P11D form.