Working from home in Ireland? You may be entitled to claim tax relief for home workers
What is working from home tax relief? Who is entitled to claim it? How much can be claimed? How to claim it? It’s all covered here!
Over recent years, up to 22% of Irish workers have spent at least part of their week working from home.
This is thanks in part to improvements in technology but also, of course, a consequence of the COVID-19 pandemic.
While remote workers have been able to save time and cost by skipping their commute, most e-workers notice increases in their utility bills since they began working from home.
The good news is that most of those workers are entitled to avail of e-worker tax relief.
If you have never worked from home before, you may be unaware of this form of relief and how to claim it.
In this guide we’ll discuss everything you need to know - including how to determine if you are eligible and what you will need in order to apply for your e-working tax rebate.
Table of contents:
- What is working from home tax relief and why was it introduced?
- Who is considered an “e-worker”?
- Who is eligible for a tax relief when working from home?
- How much tax relief can an e-worker claim?
- What expenses can a remote worker claim?
- How to claim tax back when working from home?
- Frequently Asked Questions
What is home worker tax relief and why was it introduced?
E-worker relief is a tax relief on expenses which people may incur while working from home.
It was introduced a number of years ago with the aim of reducing the costs which are associated with being a home worker.
However, it’s important to note that you cannot claim this relief for work you bring home outside of normal working hours.
Who is considered an "e-worker"? Am I entitled to a tax credit if I work from home?
E-working is characterised or defined as working for substantial amounts of time outside your normal place of work. That usually includes:
- Using a work or personal computer to send work emails or receive work related files
- Developing ideas and products or providing services remotely
- Accessing a work computer from a distance
- Having a formal agreement with an employer where working from home is required
- You must be required to do duties which are considered essential and perform them from home
So, if you work from home either full or part-time, you may be eligible for wfh tax relief.
You may also be entitled to claim if your working week is split between your home and an office. This is called hybrid working. Some people in relevant industries like finance, administrative and support services and IT can take advantage of that way of working.
Check out this podcast of The Pat Kenny Show where Taxback Director of Taxes Christine Kiely discusses how to claim tax relief when working from home.
Can everyone claim working from home tax back? Who is not eligible?
No, not every employee can claim working from home tax relief.
You will only be eligible for working from home allowance if you work at home and pay for your utility bills yourself.
For example, if you live with your parents and you work from home, you will not be entitled to e-worker tax relief if your parents pay the bills.
How much tax relief for working from home can I claim?
It is worth mentioning that there are two types of financial support for e-workers in Ireland:
- An allowance that the employer pays to the employee for every day he/she works from home. The amount of that allowance can be up to €3.20 per day without PAYE or €768 per year.
This sum is also tax-free and the employee won't have to pay Universal Social Charge (also known as USC) and Pay Related Social Insurance (also known as PRSI).
The employer can also pay higher than €3.20 but the amount over that sum will be taxed. Also, the employer is not legally obliged to make this payment. - Home worker tax relief
What if my employer does not reimburse me for my e-working expenses?
Where an employer does not pay the €3.20 per day to an e-worker, the employee is not entitled to claim a round sum of €3.20 per day. Where additional expenses are incurred, the employee is entitled to claim the following tax relief when working from home:
- 2019 and previous tax years:
Electricity and heat - 10% of cost of electricity and heat apportioned on the basis of the number of days worked from home over the year. A claim for broadband for 2019 and previous years is not available.
- 2020 and 2021 tax years: -
10% of cost of Electricity and heat - similar to 2019
Broadband - 30% of the cost of broadband calculated based on the days worked from home.
- For 2022 and 2023, Revenue accepts a claim at 30% of both - electricity & heat and broadband bills.
The average Irish tax refund is €1,880
What expenses can I claim when working from home?
This tax relief covers expenses that are typically encountered by employees who work from home. Employees can claim work from home expenses for:
- Heating
- Electricity
- Broadband
Keep in mind that in order to take advantage of the working from home tax credit, each employee should be able to prove that they incurred the relevant expenses. We will discuss this more a little later!
How can I calculate my utility costs for working from home allowance?
Many remote workers are unsure of how to calculate their remote working tax relief.
In order to work out how much tax back you’re due, you will need to know
- The exact number of days you worked from home
- How much you paid for your expenses
- The percentage of the cost that Revenue allows as a tax expense
It’s important to remember, that you can only claim for the days that you actually worked from home. And days in which you brought work home to do outside of your typical working hours will not count towards this relief.
While your yearly expenditure is taken into account, you will only get tax back from the proportion of days you spent working from home during the year.
The calculation is as follow:
You should multiply the bill you picked by the working days you were working remotely and the number you get you have to divide by 365. Then multiply the result by 30% (0.3).
Always remeber to exclude the weekends which are 104 days, the public holidays - 10 days and the annual leave which is around 20 days. You end up with 232 days or 233 working days for a leap year.
For example, by following the steps below, you can calculate your costs for the 2023 tax year:
- Work out the exactly number of days you worked from home
- Add together your total electricity, heating and internet costs
- Multiply your expenses by the number of days you worked from home
- Divide this figure by 365 (the number of days in the year)
- Multiply this figure by 30% or 0.3 (the rate of tax relief)
Remember, for tax years 2020 and 2021, the tax relief for electricity and heating was 10%. And no tax relief is available on broadband prior to 2020.
What about the tax relief on office equipment I receive from my employer?
Your employer may provide the following home office equipment to employees working from home for business use:
- A computer or laptop
- Office furniture
- A scanner or printer
- Phone, mobile and broadband
It’s important to note that this is not benefit-in-kind where private use by the employee is minimal.
A benefit-in-kind is a type of benefit which is not monetary but can be measured with money and therefore is taxable. On top of that, different taxes like PAYE and USC and PRSI can be deducted from the amount.
Are there any other expenses which can’t be claimed?
Tax relief is limited to what you spend on electricity, heating and broadband.
Unfortunately, if you spend money on other home office costs such as a desk, chair, phone or stationary, these expenses will not be eligible for a working from home tax rebate.
What will I need in order to claim this tax relief?
Like any form of tax claim, if you work from home and want to apply for tax relief, it is important that you can account for each expense you intend to claim. This means keeping a record of all receipts and bills.
Employees were once required to secure a letter from their employer which outlined that they were entitled to work from home. However, this is no longer necessary, unless specifically required by Revenue.
How to claim working from home allowance
If you’re interested in claiming tax back for working from home, it’s important to keep in mind that there are different rates of tax relief available, depending on the tax year for which you are claiming (as we have mentioned above).
When applying for your working from home tax back, the first step is to collect all of your expense receipts, as you will need them for your application. Then you need to complete your annual tax return, either Form 12 or Form 11, which depends on where you are PAYE worker only or a “chargeable person” who is required to file under the self-assessment system.
You can apply for your e-worker tax relief directly yourself for free with Revenue.
However, if you would like to ensure that your application is completed correctly and that you receive your maximum Irish tax refund, you can apply with Taxback.
Frequently Asked Questions
Due to the Covid-19 outbreak I will be working from home for the foreseeable future, and for the first time ever. Would there be any tax relief available to me?
Yes, the work from home tax relief would apply. Your employer may pay you €3.20 per day, tax free to cover this. Where your employer does not wish to reimburse the €3.20, you are entitled to claim a deduction in respect of actual vouched expenses (supported by receipts) incurred in the performance of your employment duties.
It is also worth noting that, if an employer reimburses an employee with €3.20, but actual costs incurred are over the €3.20, the employee can claim a deduction in respect of that excess over the €3.20.
The relief is given as an income deduction, which means that relief is given at employee’s marginal rate.
In other words, if you pay income tax at 20%, the relief will be at 20%.
But if you pay income tax at 40%, the relief you can claim will be at 40%.
No relief is available for USC and PRSI.
Example:
Peter works 2 months (60 days) from home and incurred electricity bills in amount of €800 for these two months.
€800 x 10% (Revenue agreed proportion) = €80 attributed to the performance of his employment duties.
Relief available is either at 20% or 40% depending on personal circumstances, so either €16 or €32.
I’ve heard the number of rooms in my house and how many of them I use for work impacts how much I can claim, is that true?
No. Revenue will accept your household expenses as business expenses, no matter in how many rooms you use for work.
I rent a house with three friends. We all work from home. Are we all entitled to e-worker tax relief?
Every remote worker will be entitled to working from home relief provided they contribute to the electricity, heating and broadband bills.
In this case, three friends are sharing a house. If each friend contributes to the cost of the utility bills, they will each be entitled to a portion of the tax relief.
I wish to claim e-worker tax relief. However, my name is not on the utility bills. Am I ineligible?
If you work from home and you pay for internet, heating and electricity bills, you will be entitled to tax relief even if your name is not on the utility bills.
However, if Revenue contact you for clarification on your tax return, it’s very important that you are able to prove that it is you who is paying for these costs.
I’m self-employed and working from home. How do I claim working from home tax relief?
If you’re self-employed and you work from home, you will be entitled to claim a number of expenses on your end of year self-assessed tax return.
Like PAYE employees who work remotely (see our full guide on PAYE), self-employed workers can claim tax relief on home heating (oil and gas etc.), electricity and internet costs.
In order to claim these costs as tax deductions, you must divide each expense into the percentage that occurred from personal use and the percentage that occurred from business use.
The relevant deduction can then be included on your Form 11 tax return.
Can I claim e-worker tax relief prior to 2019?
Yes – it’s possible to go back four years when claiming tax relief.
In other words, in the 2022 tax year, you can claim for 2021, 2020, 2019 and 2018.
It’s important to note that, for tax years 2018 and 2019, relief on electricity and heating was available at 10%. No tax relief was available on internet costs.
How does working from home affect Capital Gains Tax (CGT) and Local Property Tax (LPT)?
E-working has little effect on CGT or LPT.
Firstly, you will not receive a reduction on your LPT bill if you use a room in your home to carry out work-related activities.
And, if you use part of your home for e-working. it will not affect your Principal Private Residence (PPR) Relief for CGT.
PPR Relief entitles you to be exempt from CGT if you dispose of a property that you lived in as your main residence.
Now that I’m working from home, I use my mobile phone for all my work calls. Is my phone bill now tax deductible?
No. Revenue specifically confirmed that only electricity & heat as well as broadband bills will be allowed for relief. In case where the broadband is in bundle - with television & phone, taxpayers should work on the apportionment as only the broadband will be accepted.
I am using my home laptop now for work, is that a deduction I can make?
No. Revenue have recently confirmed that items - such as desks, scanners, laptops, where not provided by employers will not be allowed for a deduction as these are considered capital items and are not allowed under s114 TCA 1997 and s114A TCA 1997.
Who can help me to claim my tax entitlements?
You can claim your tax entitlements by applying directly yourself.
However, if you would like to ensure that you receive your maximum legal tax refund, you should apply with Taxback.
We will ensure you avail of every tax relief you’re entitled to including medical and dental expenses, flat rate expenses, home carer’s tax credit and much more.
Our average Irish tax refund is €1,880 so it’s definitely worth claiming back what you’re owed!
Our team will take care of all the tricky tax paperwork so you don’t have to. We’ll even transfer your refund straight to your bank account!
I pay for my broadband in a bundle. How can I claim some of the money back?
Sometimes broadband is supplied as part of a package so see if the supplier provides a breakdown. If there is such breakdown, you can take advantage of 30% of the given ammount.
If there is no breakdown, Revenue will accept a reasonable part of the bundle.
The average Irish tax refund is €1,880
Why apply with Taxback?
- Maximum Irish tax refund guaranteed
- No complicated forms
- Simple online process
- 24/7 Live Chat support
Claim your maximum tax refund today!
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