Countless workers across Ireland who are working from home due to the Covid-19 outbreak are entitled to avail of e-worker tax relief.
E-worker relief is a tax relief on expenses which people may incur while working from home.
The government announced in the 2021 Budget that all expenses which were incurred 'wholly' and 'exclusively' while working from home are eligible for tax relief.
If you have never worked from home before, you may be unaware of this form of relief and how to claim it.
In this guide we’ll discuss everything you need to know - including how to determine if you are eligible and what you will need in order to apply.
Am I entitled to a tax credit if I work from home?
Check out this podcast of The Pat Kenny Show where Taxback.com Director of Taxes Christine Kiely discusses how to claim tax relief when working from home.
E-working is characterised as working for substantial amounts of time outside your normal place of work.
So, if you work from home either full or part time, you may be eligible for tax relief.
You may also be entitled to claim if your working week is split between your home and an office.
However, it’s important to note that you cannot claim this relief for work you bring home outside of normal working hours.
How much can I claim?
Employers can pay €3.20 tax-free a day to their employee to cover the additional costs associated with working from home. However, it is not a legal obligation for employers to make this payment to their employees.
Where an employer does not pay €3.20 per day to an e-worker, the employee is not entitled to claim a round sum of €3.20 per day. Where additional expenses are incurred, the employee is entitled to claim the following:
- Electricity and heat - 10% of cost of electricity and heat apportioned on the basis of the number of days worked from home over the year.
- Broadband - 30% of the cost of broadband apportioned on the basis of the number of days worked from home over the year. This concession, commencing in tax year 2020, will apply for the duration of the pandemic.
If an expense is shared between two or more people, the cost can be apportioned based on the amount paid by each individual.
The average Irish tax refund is €1076.17
What expenses can I claim when working from home?
This tax relief covers expenses that are typically encountered by employees who work from home. This includes:
What about the equipment I receive from my employer?
Your employer may provide the following to employees working from home for business use:
- A computer or laptop
- Office furniture
- A scanner or printer
- Phone, mobile and broadband
It’s important to note that this is not benefit-in-kind where private use by the employee is minimal. A benefit-in-kind is a non-cash benefit of monetary value that an employer provides for an employee. These benefits have monetary value and are therefore treated as taxable income. That means PAYE, PRSI and USC are usually deducted.
What will I need in order to claim this tax relief?
Like any form of tax claim, if you work from home and want to apply for tax relief, it is important that you can account for each expense you intend to claim. This means keeping a record of all receipts and bills.
You may also need a letter from your employer stating that you work from home.
Frequently Asked Questions
Due to the Covid-19 outbreak I will be working from home for the foreseeable future, and for the first time ever. Would there be any tax relief available to me?
Yes, the work from home relief would apply. Your employer may pay you €3.20 per day, tax free to cover this. Where your employer does not wish to reimburse the €3.20, you are entitled to claim a deduction in respect of actual vouched expenses (supported by receipts) incurred in the performance of your employment duties.
It is also worth noting that, if an employer reimburses an employee with €3.20, but actual costs incurred are over the €3.20, the employee can claim a deduction in respect of that excess over the €3.20.
The relief is given as an income deduction, which means, that relief is given at employee’s marginal rate.
In other words, if you pay income tax at 20%, the relief will be at 20%.
But if you pay income tax at 40%, the relief you can claim will be at 40%.
No relief is available for USC and PRSI.
Revenue accept that 10% of household expenses are considered to be business expenses (no relief is given for any private element of the expenditure).
Peter works 2 months (60 days) from home and incurred utility bills in amount of €800 for these two months.
€800 x 10% (Revenue agreed proportion) =€80 attributed to the performance of his employment duties.
Relief available is either at 20% or 40% depending on personal circumstances, so either €16 or €32.
I’ve heard the number of rooms in my house and how many of them I use for work impacts how much I can claim, is that true?
No. Revenue will accept 10% of your household expenses as business expenses, no matter in how many rooms you use for work.
Now that I’m working from home I use my mobile phone for all my work calls. Is my phone bill now tax deductible?
Yes. Any work calls will be considered as a business expenditure and therefore tax deductible. Again, if you can’t make a proper calculation between private vs business calls, Revenue will accept that 10% of your mobile costs are for business purposes.
I am using my home laptop now for work, is that a deduction I can make?
Where employers provide employees with computers, printers and other facilities for business use and where the private use is minimal this will not be treated as a taxable income under BIK rules.
However, where employees are using private laptops for business use, a wear and tear allowances can compensate the depreciation of the asset. The wear and tear rate is 12.5% annually over 8 years. Again, Revenue accept that 10% is for business use only, so this would be a further restriction. It should be noted that wear and tear allowance is available only in respect of assets that are used at the end of the tax year.
I worked in a bar for 5 years but lost my job last week. I never claimed my flat rate expenses, can I go back and claim those years now?
Yes, you can go 4 years back and claim your flat rate expenses. Bar trade employees are entitled to €93 flat rate expenses. The relief is given at employee’s marginal rate either at 20% or 40%, so the relief for 4 years can go up to €148.80 (€93 x 40% * 4). Many other individuals are also entitled to the flat rate expenses based on their specific job position.
The easiest way to claim your flat rate expense is to apply with Taxback.com.
Who can help me to claim my tax entitlements?
You can claim your tax entitlements by applying directly yourself.
However, if you would like to ensure that you receive your maximum legal tax refund, you should apply with Taxback.com.
While e-worker tax relief for 2020 cannot be claimed until January 2021, there are a number of tax reliefs that can be claimed right now.
We will ensure you avail of every tax relief you’re entitled to including medical and dental expenses, flat rate expenses, home carer’s tax credit and much more.
Our average Irish tax refund is €1,076 so it’s definitely worth claiming back what you’re owed!
Our team will take care of all the tricky tax paperwork so you don’t have to. We’ll even transfer your refund straight to your bank account!
Why apply with Taxback.com?
- Maximum Irish tax refund guaranteed
- No complicated forms
- Simple online process
- 24/7 Live Chat support
Claim your maximum tax refund today!
The average Irish tax refund is €1076.17