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Working from Home Costs – Tax Free Allowance for Employees

Working from Home Costs – Tax Free Allowance for Employees

Shelley Yeates
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During the Covid-19 lockdown, Inland Revenue produced a determination which allowed employers to pay their employees a tax free allowance, to cover expenses incurred while the employee was working from home.  The allowance was a temporary response for the period 17 March 2020 to 17 September 2020 and only applied if you were working at home as a consequence of the Covid-19 pandemic.

Inland Revenue is now looking at making this permanent because more and more people are now choosing to work from home, rather than just being as a result of employees being forced to due to Covid-19.  Inland Revenue were unable to implement this before the 17th of September, therefore they have made some changes to the current determination.  The changes are:

  • They have removed the requirement that the employee has to work from home due to Covid-19,
  • They have extended the application date a further six months up to 17 March 2021.

Other than this, all criteria remain the same, including the $15 per week maximum tax free allowance.  These changes allow employers to continue to pay employees a tax free allowance for working at home (if they choose to).

Inland Revenue will now consider all matters relating to the tax consequences of employees working from home and will put a new determination in place in due course.

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