New exemption for COVID-19 related reimbursed home office expenses

By Technical Team on 13 May 2020

The Financial Secretary to the Treasury has today announced that the reimbursement of expenses that would be for home office equipment are exempt from tax. The relevant Regulations are to be laid next week, and will have effect for the 2019-20 (from 16 March 2020 only) and 2020-21 tax years.

The temporary income tax and National Insurance (NIC) exemption will ensure that no tax liability arises where employers reimburse employees’ personal expenditure on home office equipment arising from arrangements to work from home during the COVID-19 outbreak.

To be eligible for the exemption the expenditure must meet the following two conditions:

  1. That equipment is obtained for the sole purpose of enabling the employee to work from home as a result of the coronavirus outbreak, and
  2. The provision of the equipment would have been exempt from income tax if it had been provided directly to the employee by or on behalf of the employer (under section 316 of ITEPA).