Section 3 of the Finance Act 2021 inserted a new provision at section 114A of the Taxes Consolidation Act 1997 (TCA) in respect of Remote Working Relief (RWR), which provides income tax relief for remote workers on relevant expenses incurred in the performance of the duties of his or her employment while working from home.

What is remote working

Remote working is regarded as a method of working, using information and communication technology, in which the work-related activity that is carried out is not bound to any particular location. Remote working includes:

• working at home either on a full-time or part-time basis
• working some of the time at home and the remainder in the office
• logging onto the employer’s computer system remotely
• sending and receiving emails, data or files remotely
• developing ideas, products and services remotely

The tax relief only applies to remote workers. The arrangements do not extend to employees who, in the normal course of employment, choose to bring some work home in the evening or at weekends etc.

Qualifying conditions for an employee

In order to qualify as a remote worker, for the purpose of claiming RWR, in respect of relevant expenses incurred in working from home, the following conditions must be met:

• There must be an arrangement in place between the employer and the employee under which the employee is required to work from home. While there is no requirement in legislation for a formal agreement or letter to be submitted, it is expected that there will be a policy in place or an agreement between the employer and employee, whether verbal or written, that the employee can work from home
• An employee must be required to perform substantive duties of the employment at home
• An employee must be required to work for substantial periods at home

What are relevant expenses

Relevant expenses are defined as expenses incurred and defrayed by the remote worker, in respect of the provision of electricity, heating or broadband in his or her qualifying residence. The relief does not extend to any other expenses.

To calculate the relief the relevant expenses must be:

• apportioned over the number of days in the year the employee worked remotely
• multiplied by 30% to establish the specified amount

Calculating the specified amount

 The specified amount means the amount of expenditure which qualifies for income tax relief. In relation to the 2022 year of assessment and subsequent years, the specified amount will be determined by the following formula:

A x B – D    x   30%                                                                    

C

A is the amount of relevant expenses incurred and defrayed by the remote worker in the relevant year of assessment.

B is the number of days in the relevant year of assessment the remote worker performed the duties of his or her office or employment from his or her qualifying residence.

C is the number of days in the relevant year of assessment.

D is any amount paid or due to be paid, either directly or indirectly, to the remote worker in relation to those expenses by his or her employer.

How the relief is calculated

The income tax relief provided is granted by deducting the specified amount from the taxable emoluments arising from the individual’s office or employment. The relief is therefore given at the individual’s marginal rate of tax.

This equates to income tax relief of 20% or 40% of the specified amount for an individual depending on whether the individual pays income tax at the standard rate or higher rate respectively.

The example below outlines the approach an employee claiming relief for allowable remote working expenses in the performance of the duties of employment.

How to make a Claim for RWR

Taxpayers must make a claim for RWR. This can be done online and is a quick and easy process.

The receipts must be submitted with the remote working relief claim (i.e. the utility bills must be electronically uploaded). Therefore, when making a claim for RWR the remote worker will need to provide a copy of the utility bills issued by the service provider in respect of the premises where the remote worker carried out his/her duties of employment. The claimant will also need to provide any other information that may be requested by the Revenue Commissioners so as to determine that the requirements of the remote working relief are met.

Taxpayers can manage and keep track of their remote working and other receipts on the Receipts Tracker service, which is available in myAccount and ROS.

Remote workers in receipt of PAYE income can claim relief for their relevant remote working expenses in one of the following ways:

• In-year, using the Real-Time Credit facility
• after the end of the year, by completing an Income Tax Return

The total amount of relief received in respect of a year of assessment will be the same, irrespective of whether the relief is claimed in year or following the end of the year of assessment. The only difference is one of timing, with relief available earlier in relation to in-year/real time claims.

Claiming tax relief “in-year”

The Real-Time Credit facility can be accessed through myAccount, under the ‘PAYE Services’ and ‘Manage My Record’ cards. To claim tax relief in real time, taxpayers will be required to provide details of the remote working expenses he/she has incurred, along with a readable image of the relevant utility bills. A step-by-step guide to making and checking the progress of a claim using the Real Time Credit facility is available on the Revenue Website for Real Time Credits.

When an “in-year” claim is made, the relief due is granted as follows:

• The tax relief due is calculated and apportioned equally over the year of assessment
• The portion of relief due up to the time the claim is made may be given by way of a refund. This is subject to the amount of income tax actually paid by the claimant at that time being equal to or higher than that portion of the relief and the claimant being taxed on the cumulative basis
• The portion of relief due over the remaining part of the year will be given by way of an increase to the claimant’s tax credits. This will reduce the amount of tax deducted from the claimant’s payroll for the remainder of the year