Covid-19 - New exemption for home office equipment

The Financial Secretary to the Treasury has announced that organisations reimbursing staff for equipment purchases enabling them to work from home during the coronavirus pandemic will not have to pay tax.  This could include internet access, computer equipment, office furniture etc.  Under the normal procedure, employers have to account for tax and NIC on reimbursed expenses of this type via a PAYE settlement agreement. 

The government is introducing a year-long exemption that means employers will not have to pay tax or national insurance contributions (NIC) on reimbursement of employees' personal expenditure on home office equipment purchased to enable them to work from home during COVID-19.  The Regulations will have effect from 16 March 2020 until 5 April 2021.

To be eligible qualify for the exemption, the expenditure must meet both the following conditions:

  • that office equipment must have been purchased for the sole purpose of enabling the employee to work from home as a result of coronavirus crisis, and
  • the provision of the equipment would have been exempt from income tax if it had been provided directly to the employee (so is subject to the proviso that private use is not significant).