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Your Questions: What are the income tax implications of working from home?



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Question: Over the last couple of years my work set-up has migrated more to my home, so much so that I have agreed that by the end of the year I will be working almost 100pc from my home. I only go to the office intermittently for meetings and presentations. My employer is going to buy some work-related items, such as a new laptop and a phone, and has offered to pay something small towards my overheads. What does this change mean from a tax perspective?

Answer: Becoming an e-worker should not result in any increase in the amount of tax you pay, according to commercial director of Taxback.com Eileen Devereux.

Under Revenue rules your employer can provide you with the basics (computer, print, office furniture, etc) you need for work, without you having to pay benefit in kind so long as they are used primarily for work purposes.

And your employer can pay you up to €3.20 tax-free for every working day, to assist with your utility costs. You don't mention how much you employer intends to pay in this regard but even if it does pay the full €3.20 and/or if your working from home costs exceed this, then you will be entitled to a refund of some sort on this money, Ms Devereux said.

Any claims made will need to be supported with evidence in the form of receipts and a letter from your employer stating that you do work from home and that it does not reimburse you for these expenses. You will also need to let Revenue know the number of rooms in your home and whether or not it is a house-share.

The allowance, or rebate, claimed must be reasonable, allowing for the fact that the utilities are for both personal and work and benefit everyone else in the home. This means the refund received will be based on only a portion of the overall expenses.

Question: I want to downsize my work van from my current 2.2 litre Ford Transit. Will buying a smaller van help to bring down my insurance costs? I have been driving for 15 years and have a full no-claims bonus, but I feel I am still paying over the odds.

Answer: In terms of lowering your insurance costs, when it comes to changing your van there are several consideration which will significantly impact your premiums.

These include vehicle specifications, model, and engine size and most importantly the carrying capacity of the van itself, according to Jonathan Hehir, the managing director of InsureMyVan.ie. Each van will have its own specific insurance risk and cost placed against it. Before making a purchase, work out what size van fits your needs best. There is no point getting a large van, which could add to your insurance costs, if you only need a small van to carry out your work.

The basics that apply to reducing car insurance also apply to van insurance so your age, your licence type (ie, full/provisional) and the number of years on your no-claims bonus will be key considerations. Van insurers also place significant emphasis on what the van is being used for, so you must be clear about the purpose of your new van. It is important to ring around and get cost comparisons as the insurer that was best on price for the big van, may be the worst for the smaller van.

Question: My employer has paid my health insurance premiums since I began working with them in 2013 and along with my company car, I pay benefit in kind on these subsidies every year. I recently read that PAYE workers get tax relief on health insurance premiums. So it seems that I am at a disadvantage because my employer pays mine, even though I pay benefit in kind on the premiums?

Answer: You are not at a disadvantage tax-wise, according to the commercial director of Taxback.com Eileen Devereux. She said that like thousands of other workers in your position, you have not been made aware that you can claim tax relief on the premiums paid by your employer. If you were to fund your private health insurance yourself, your relief would be deducted at source and you would not need to alert Revenue, but because your employer pays that means you have to take some action.

Contact Revenue directly and notify them of the gross premium paid on your behalf by your employer, on which you have been charged benefit in kind (BIK). Revenue will run the calculations and refund you any mony due.

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While you can't claim as far back as when you first started working with your employer, you can go back four years when claiming your tax entitlements.

Under Revenue rules your employer can provide you with the basics you need for working at home without you having to pay benefit-in-kind tax.

Many people are not aware that they can claim tax relief from Revenue on health insurance premiums that are paid for by their employer.

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