Will people working from home have to pay more tax?

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Work from home has replaced offices over the last few months as buildings around the country hace become potential hotspots for COVID-19. Although some offices briefly welcomed back workers, a second wave of the virus has endangered people once more, necessitating a longer-term return to home working. The new lockdown has piled pressure on shops and workers who already struggled during lighter restrictions, with financial experts now recommending relief via tax hikes.

Will people working from home have to pay more tax?

Working from home has introduced a selection of problems during the pandemic, but it is unavoidable.

As such, people do not have to pay more tax right now and can get some relief if they have to work at home by their employer.

The situation will likely continue for some time, but financial experts have recommended introducing higher taxes for people who work from home post-pandemic.

Economists with Deutsche Bank recently proposed forcing people to pay five percent per day for remote working.

Proceeds from the plan would then go towards subsidies for lower-paid workers.

Overall, economists believe the move could save up to £7billion in the UK.

Deutsche Bank argued most workers would end up no worse off as well, thanks to savings made from dropping the commute, office clothes or takeaway food.

Jim Reid, global head of fundamental credit strategy and thematic research at Deutsche Bank, predicted the taxes would become necessary amid a “new normal”.

He said: “Working from home will be part of the ‘new normal’ well after the pandemic has passed.

“Our calculations suggest the amounts raised could fund material income subsidies for low-income earners who are unable to work remotely and thus assume more ‘old economy’ and health risks.”

Other analysts with the company argue the tax was inevitable, but COVID-19 just brought the need into sharp focus.

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Luke Templeman, a strategist with Deutsche Bank, added governments needed to make up for people receiving disproportionate benefits from the current economy.

He said: “For years we have needed a tax on remote workers – covid has just made it obvious.

“A big chunk of people have disconnected themselves from the face-to-face world yet are still leading a full economic life.

“That means remote workers are contributing less to the infrastructure of the economy whilst still receiving its benefits. That is a big problem for the economy.”

While the pandemic continues, people can claim tax relief if forced to work from home.

Eligible people can claim relief for additional costs such as electricity or heating bills, rent or council tax.

From April 6 this year, people cold start claiming tax back on the exact amount of extra costs incurred above the £6 weekly amount, but they will need to show evidence.

Claimants will get relief based on the rate they pay, meaning if they pay 20 percent basic rate and claim relief on £6 a week, they could get £1.20 a week.

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