Revenue have issued updates to e-working and tax. As a majority of the country are now working from home, let’s recap on what this means for employees and employers?
What is an e-worker?
This is where an employee;
- Works from home full or part-time
- Works on the move, with visits to normal place of work
What is e-working?
This is where your work involves;
- Working for substantial periods outside normal place of work
- Working remotely and logging on to work computer
- Sending & receiving emails & data remotely
An employer can provide any of the following to an e-worker for business use;
- Office Furniture
These are not classed as benefit in kind.
An employer can choose to make a payment of €3.20 to the employee per day without deducting PAYE/PRSI or USC. This payment is to cover utilities such as light & heat and broadband. If the employer does not choose this option, the employee can include these expenses in their end of year tax return. These expense items are allowed as a tax deduction for income tax purposes.
Where additional expenses are incurred, the employee is entitled to claim the following:
- Electricity and heat – 10% of the 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.
The employee is not entitled to claim a set sum of €3.20 per day directly with Revenue. To claim an allowable e-working expense, the employee must have incurred the cost and it is the responsibility of the employee to retain proof of payment. If an expense is shared between two or more people, the cost can be apportioned based on the amount paid by each individual.
Calculation of Allowable Relief
The example below from Revenue outlines the calculation for employees claiming tax relief on allowable expenses.
Eve works 180 days in total during the year, and 90 of these days are from home. The annual amount of expenses incurred by Eve on allowable utility bills is €1,750 on electricity and heat and €430 on broadband. These amounts should be apportioned based on the number of days working from home over the year, and then a further apportionment for business use.
Therefore, the total amount of e-working expenses that would be claimed under ‘Remote Working (e-Working) Expenses’’ is €43.00 + €32.00 = €75.00 (this is the total e-working expense amount due). Eve pays tax at the higher rate of 40%, so she will be entitled to a tax credit of €30 (€75 x .40 = €30)
So what has been updated?
- Revenue have now updated expenses allowable to include reference to apportioning where the expenses are shared and the treatment of expenses on capital items by employees.
- The ‘Covid-19 concession’ allows for a deduction of 30% of broadband expenses incurred.
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