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Home expenses & e-working

Revenue accept that e-Workers will incur certain extra expenditure in the performance of their duties from home, such as additional heating and electricity costs and there is tax relief available

So what is e-working?

It’s a method of working, using IT and communication technologies, in which your work activity is not tied to any particular place. It includes working at home either on a full-time or part-time basis and working some of the time at home and the remainder in the office.

E-Working involves:

·         logging onto the employer’s computer system remotely;

·         sending and receiving email, data or files remotely;

·         developing ideas, products and services remotely.

Note the relief does not apply to employees, in the normal course of their job, who choose to bring some work home in the evening or at weekends, etc.

There are some conditions?  Yes a few…..

·         There must be a formal agreement in place with your employer in which you are required to work from home;

·         You must perform substantive duties of the employment at home; and

·         You are required to work for substantial periods at home.

What is the relief

Well there are two scenarios  – relief for expenses incurred paid by employer or those expenses not paid by the employer

Payment by an Employer

Revenue allows an employer to make payments up to €3.20 per day (to cover additional costs such as heating and electricity costs) to employees who meet the conditions for the relief, without deducting PAYE, PRSI, or USC.  Amounts in excess of €3.20 paid by the employer should be subject to tax.  Employers should note that records of payments made, being expense claim forms, must be retained for the purpose of any potential future Revenue compliance intervention.

Employer does not make payment towards e-worker expenses

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.  However, employees can claim a deduction in respect of actual vouched expenses incurred wholly, exclusively and necessarily in the performance of the duties of their employment, and that test is strictly applied.   Where an employee decides to make such a claim, any reimbursement of expenses by the employer including the daily €3.20 paid, should be deducted from such a claim.

How is this calculated?

This best shown by way of an example:-

·         Steve works 100 days from home during the year.

·         The annual amount paid on allowable utility bills (heating and electricity, etc) is €2,000:

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

Allowable utility bills   x   No. of e-working days

                           365 days

So in Steve’s case            €2,000 X 100    =   €548

                                                  365

This amount (€548) 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, the amount of e-working expenses that would be “allowable deductions incurred in employment” is €548 X 10% = €55 (this is the e-working expense amount due).

How can I claim e-Working expenses

Expenses can be claimed by completing an Income Tax return through myAccount. 

Provision of Computers & other Equipment

If you have an e-working arrangement your employer may provide equipment with no BIK charge, such as computers, printers, scanners, fax machines and software.to enable you to work from home.

The provision of a telephone line, broadband , office furniture, etc. for business use will also not give rise to a BIK charge, where private use of the connection is incidental.

Normal Place of Work

If you work part-time in the office and part-time at home/full-time at home, the normal place of work is the office.  Revenue under no circumstances will allow expenses be reimbursed tax free in relation to travel between a person’s home and his or her place of work.  The same restriction applies to subsistence expenses. See link below to the recent Revenue e-brief for further information on this topic

https://www.revenue.ie/en/tax-...

As always talk to your accountant re the above and if you feel you would benefit from a chat with one of the CF team please contact us on 051 396703.



 

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