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Who is likely to be affected?
- Employees who regularly work at home under
agreed flexible working arrangements and whose
employer contributes to any additional household
costs they incur in doing so.
General description of the measure
- When an employer contributes to additional
household costs incurred by an employee, who
works some or all of the time at home, the
employee would normally be chargeable to income
tax on the payment. This measure means that
employers will be able to meet some or all
of the incidental household costs incurred
by employees who work at home without it giving
rise to a tax charge. Such payments can already
be made without giving rise to a NICs liability.
Operative date
- 6 April 2003.
Current law and proposed revisions
- Under income tax law any payment by an
employer towards additional household costs
incurred by an employee who works at home
would normally give rise to a tax charge in
the hands of the employee. The proposal announced
today will introduce a specific exemption
covering such payments.
- 5. To minimise the need for record-keeping
employers will be able to pay up to £2
per week (£104 per year) without supporting
evidence of the costs the employee has incurred.
- 6. If an employer pays more than that amount,
the exemption will still be available but
the employer must provide supporting evidence
that the payment is wholly in respect of additional
household expenses incurred by the employee
in carrying out his duties at home.
Further advice
- If you have any questions about this change,
please contact the Public Enquiry Unit on
020 7438 6420 to 6425.
www.inlandrevenue.gov.uk
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