Budget 2003: Contribution towards Homeworking Costs

Many employees work from home from time to time under flexible arrangements with their employers. Some employers have offered employees a financial contribution towards any additional costs they might have incurred from working at home. Such payments have usually given rise to a tax liability for the recipient.

From 6 April 2003, employers will be able to give such employees an allowance of £2 per week (£104 per year) free of tax and national insurance contributions without evidence that additional costs have been incurred. Employers will also be able to pay more than this amount on the same basis when evidence can be provided supporting additional expenditure in excess of £2 per week.

Whilst the value is small, this allowance recognises that homeworking features in many employee's working lives. It should also provide a useful basis for negotiation with the Inland Revenue where additional homeworking costs are incurred.
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