The pandemic has seen many more employees working from home since March – either on a full-time or part-time basis. Revenue refers to this as “eWorking” and the government launched a tax relief which is available to qualifying employees. Here is what employers and employees should know about the scheme.
New tax relief available for eWorking
This tax relief is to cover the cost of working from home – for example, the employee may be using extra electricity, extra heating, or broadband capacity. As an employer, you may pay an employee up to €3.20 per day without deducting PAYE, PRSI, or USC. You can pay employees more than this, of course, but any difference will be taxable.
The definition of eWorking and e-workers
Firstly, this tax relief is applicable where an employee is working from their home – either full-time or part-time – instead of working from the company’s office(s). It is not for situations where, for instance, an employee takes some of their work home to complete in the evening.
An employee is an e-worker if they work for substantial periods outside the normal place of work (the company office, for example). During this period of time, they may be logging onto a work computer/environment remotely, sending and receiving emails or files remotely, or developing ideas, products, and services remotely.
An employee who does not typically work from the office does not qualify as an e-worker. An example might be a salesperson who spends most of their time at other locations talking to clients and potential clients. Although there are some tasks that such an employee carries out in the office environment, those tasks are only a small part of their role. Even when these tasks are carried out in their home instead of in the employer’s office, this type of employee cannot receive the €3.20 tax free.
Frequently Asked Questions About eWorking Tax Relief
I have been receiving an eWorking allowance. What else do I need to do?
If your employer has been paying you €3.20 per day for every day you worked from home, there is nothing else you need to do. You make see the amount noted on your payslip as a non-taxable item, but in many cases you may simply receive this as a separate payment (and not necessarily on a monthly basis).
This allowance is entirely voluntary and not an obligation of the employer. If your employer chose not to pay you an allowance, you will still be able to offset some of the costs you have incurred, as we explain in the next question.
Can I claim this as tax relief against my taxes?
Yes, you can claim this credit against your taxable income in your next income tax return as long as you haven’t been receiving the €3.20 from your employer. Relief, in this case, would be based on 10% of electricity and heat, and 30% of broadband (apportioned based on the number of days worked at home over the year).
This is what we advise if your employer has chosen not to pay you through your salary. Just make sure that you keep records of the bills that relate to your claim for six years.
Can directors claim this tax relief?
Directors who work in the business can claim this tax relief too. As above, you may choose to simply put in an expense claim for the amount and it can be paid at the discretion of the business.
Can sole traders claim this tax relief?
Sole traders that do not rent office space will often put their home working costs through the business anyway; for example, a percentage of their rent and utility bills are business expenses if they use their home as a base for work. If you already do this, you cannot also claim the €3.20 per day tax relief. However, you could claim the €3.20 per day instead if this if it is more advantageous to you.
Does this tax relief apply to equipment?
An employer may provide equipment (computers, furniture, software, phones, etc.) to its employees to enable them to carry out their duties in their home environment. As long as the employee’s private use of such equipment is minimal it is not seen as a benefit-in-kind.
If an employee chooses to purchase equipment themselves, this is not an allowable deduction even if it is used for work-related activities.
Are there any changes in CGT or LPT if working from home?
There is no reduction or increase in Local Property Tax if you use a room in your home to carry out your work-related duties.
Fortunately, working from home does not affect your Principal Private Residence Relief claim for full exemption from Capital Gains Tax.
Does the tax relief apply to travel?
Under no circumstances may expenses be reimbursed tax free in relation to travel between a person’s home and his or her place of work. This has not changed even though many people are now working from both home and office.
If an employee has to travel to other locations to carry out their duties (site visits, meetings at client offices, etc.), they are entitled to claim travel and subsistence expenses subject to the normal rules. However, the journey length must be the shorter between either:
- the employee’s home and the location they must travel to, or
- the employer’s office (where they are usually based) and the location they must travel to.
If an employee claims travel and subsistence on the same day the employer pays them €3.20, the €3.20 will be taxable.
Can an employee be paid more than €3.20?
If you have decided to pay employees more than this amount, that is entirely up to you. However, only €3.20 per day is tax-free and any additional amount will be subject to payroll taxes as usual.
Uptake of the scheme
Full details can be found in this guide from Revenue on e-working and tax (PDF).
In my experience, most employers aren’t paying this €3.20/day and there is no way to force them to. Employers may be taking the view that employees working from home isn’t a situation the business would have chosen and doesn’t benefit them as an employer. Also, it could be argued that an employee is already saving significant amounts on travel and lunches and doesn’t need any additional benefits.
If you aren’t getting this amount from your employer, do look into offsetting home-working costs from your next tax return instead, as explained above.