I am working from home nearly full time. I have not seen a big saving in moving from the office to home, as I was cycling to work and eating packed lunches, but the heating and electricity bills have increased a lot.
For 2020 and 2021 my employer paid the €3.20 working-from-home allowance, which was most welcome. For 2022 they have decided to shift the burden to the employees. They have stopped paying the working-from-home allowance and instead we have been instructed to claim the remote working relief of 30 per cent of broadband, electricity and heating. This will work out as a lot less, especially as it’s a percentage of my bills rather than a set amount.
I have taken steps to reduce my broadband bills by switching frequently and driving bargains with my provider. My house has an A3 rating, so heating bills are minimal. And last year we had solar panels installed at great expense — with no help from the State. This has reduced electricity bills significantly, and will even provide us with some income when exporting to the grid (which is taxed after €200).
So, while I realise I am in an extremely fortunate position, I am wondering whether a) I can claim for electricity provided by my solar panels that has effectively been bought up front, and b) is there any way to compel my employer to pay the WFH allowance instead of claiming remote working relief?
Mr D.W., email
Remote working has its advantages but it’s not all that it’s been cracked up to be. Some employers did offer to pay the higher flat remote working allowance during the dark days of the pandemic when it was impractical for all but essential workers to work regularly from offices. But that has now changed.
Whether it’s a matter of businesses feeling the pinch as rising costs add pressure just as they are getting their operations back to normal, or employers subtly trying to encourage a widely-flung workforce to focus once again on office life, moving employees off the default allowance is an easy win for companies. In any case, the majority, I think, always defaulted to the scheme where the employee applies directly to Revenue.
While heating should not be much of an issue now, given our recent weather, electricity bills keep mounting and broadband is an office essential these days.
So let’s see what is available.
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The working-from-home allowance is a payment your company can make directly to you, tax free. It is capped at €3,20 a day. In the rare circumstances where an employer is offering more than that, anything above the €3.20 per diem figure is taxable. Otherwise, it is free of income tax, PRSI and universal social charge.
That’s not all, though. If you can persuade your employer to help fit out your home office, that too is tax free.
But if they don’t it is down to you to apply to the Revenue. This is not as complex as it once was but it is still fiddly and the amount you are likely to get at the end of the day is really token.
The rules say that you can claim for heat, electricity and connectivity costs. But Revenue is more finicky than that. It says you can only claim a portion of the respective bills to reflect the fact that a portion of heat, light and broadband would be used anyway.
That’s true, but if you were living alone and are now running up bills for eight to 10 hours or more a day that would previously have been covered by your commute and office hours, the proportion of your bills covered by work hours will be more than Revenue is prepared to countenance.
Having said that, the Government has made some (very) modest efforts to improve things as most of the workforce decamped to home offices on Government advice during the pandemic.
For this year, which is the one concerning you, you are allowed to claim 30 per cent of the costs of your heat, electricity and broadband bills — though only for those days you are actually working from home. In your case, this sounds like five out of seven but, for many, it might be less in our new hybrid working world.
Anyone still claiming for previous years should note the figures are less generous. Up to 2020 you could not claim for broadband and you could claim only for 10 per cent of the other costs on the days you worked from home. In 2020, 30 per cent of broadband bills were allowed on top of the 10 per cent of power and heating bills.
The good news for those on higher earnings is that the relief is paid at your marginal, or higher rate of income tax. You can claim at the end of the year as was traditionally the case or, through Revenue’s myAccount service, as and when the bills land which is helpful given how dramatically energy bills are rising.
Regardless, you won’t be getting rich on the back of any claim and you would certainly be better off under the old remote work allowance that your company was happy to pay until now.
So can you force them to pay the flat allowance over the inferior relief? No. I’m not sure why two unequal systems are in place but it is the employer’s right to choose which they are happy to operate or, more accurately, whether they are happy to contribute to your home working bills or whether they will simply leave it to you to scrape a few pennies back from Revenue.
And what about those solar panels on your roof? As you say, between that and other investments to make the property energy efficient, you are effectively helping to reduce the amount you can claim because you will be claiming the same percentage of lower bills. The Minister for Finance will no doubt thank you for being an upstanding citizen but that’s it. You won’t get any financial allowance to reflect the fact that your investment in solar panels has reduced the outlay of the tax authority.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice
