TAX CODES - 12.05.2022

Urge your employees to check their tax codes

If your employees were asked to work at home during the pandemic, they were entitled to claim a £6 per week tax relief to cover their costs. The problem is that if HMRC has now adjusted their tax code for this claim, they may be underpaying PAYE for 2022/23. How can you help?

£6 per week tax relief

Employees who were required to work from home during the pandemic could claim a £6 per week tax-free deduction from their earnings - even if they received nothing from their employer. This would generally be given by a PAYE coding adjustment so that the amount of PAYE deducted from their pay would be reduced.

Rolled forward in tax code

Reliefs given via a PAYE code are often automatically rolled forward. So, if the employee claimed the £6 relief for 2021/22 as they were still required to work from home, then HMRC may have rolled forward this coding adjustment to 2022/23.

Pro advice. The £6 per week home office relief is only available from 6 April 2022 onwards if your business specifically requires the employee to work from home, e.g. to continue to stop the spread of coronavirus or because their job has been “relocated” and is now contractually regarded as a 100% home office role.

Pro advice. When an employee claims the working from home allowance of £6 per week, their tax code changes to 1288L (assuming they have no other adjustments). If you see such a code for 2022/23 and you know that the employee is no longer required to work from home, it would be worth advising them to contact HMRC so that they don’t end up owing PAYE at the end of the tax year.

Details on how to contact HMRC

If you see that an employee has a tax code of 1288L, this may suggest that HMRC has rolled forward the £6 per week working from home tax relief. If the employee is no longer required to work from home, advise them to contact HMRC to get their code changed to avoid an unwelcome PAYE bill at the end of the tax year.

© Indicator - FL Memo Ltd

Tel.: (01233) 653500 • Fax: (01233) 647100

subscriptions@indicator-flm.co.uk • www.indicator-flm.co.uk

Calgarth House, 39-41 Bank Street, Ashford, Kent TN23 1DQ

VAT GB 726 598 394 • Registered in England • Company Registration No. 3599719