CORONAVIRUS: An Update on Home Working Expenses and CJRS

The Government has announced a temporary tax and NI exemption on home office equipment purchased by employees and reimbursed by the employer. Further details are to be published later this month.

Based on the information currently provided, in order to qualify the equipment:

  • must have been bought for the sole purpose of enabling the employee to work from home as a result of the coronavirus outbreak;
  • and would have qualified as exempt from income tax if it had been provided directly to the employee by or on behalf of the employer. This would include any private use being ‘not significant’ and it’s only use being to enable the employee to perform the duties of that employment. There is also a list of excluded items which would automatically trigger a benefit charge in any circumstances such as building works of any type to create a ‘home office’ and these remain in force.

What this means is if an employee needs, say, a scanner at home to work they can buy one and claim the purchase cost back without incurring a benefit charge. This is a relaxation to deal with specific COVID-19 lockdown requirements, the provision of a desk, a chair etc. will still trigger the benefit regulations as they would not be classed as being directly in response to the current situation.

Whilst the rules will apply from the day after the regulations come into force until the end of the tax year 2020/21, HMRC will use its discretion to not collect tax and NI due between 16 March 2020 (the date the government recommended working from home) and the date these regulations take effect.

Coronavirus Job Retention Scheme

Government guidance has been updated to note that all records should be retained for 6 years. This includes the:

  • claim period and amount for each employee
  • the claim reference number
  • the calculation of the amount.

This includes clarification on non-discretionary payments and overtime. In particular, whilst only contractual obligation to which the employee has an enforceable right should be included, this may include variable payments in a contract which are always made.

Guidance has also been published explaining how the scheme works with regard to statutory holiday entitlement:

  • Workers on furlough still accrue statutory holiday entitlement along with any additional holiday provided under their employment contract.
  • Employers can require staff to take holiday or cancel a worker’s holiday if appropriate notice is given, subject to the employment contract.
  • Workers on furlough can take holiday without disrupting their furlough but must be paid their normal holiday pay (rather than the reduced amount under the scheme).
  • Bank Holidays that occur within the furlough period and would normally have been part of the holiday entitlement must either be paid at the full amount as holiday or, with the employee’s agreement, can be deferred till a later date.
  • There is also extensive guidance on carrying forward leave into future years.

Wednesday, 20th May, 2020