Employees Working From Home – Tax Note

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Special Arrangements for Household Expenses Reimbursed by Employer.

Normally, all expenses incurred by an employee and repaid by their employer must be treated as remuneration, processed through the payroll and be subject to deduction of ITIP, unless the employer has been granted a dispensation.

Working from Home – Special Arrangements

The Isle of Man Government has introduced special measures in recognition of employees having to work from home due to the COVID-19 pandemic.

The measures will be applied from 30 April 2020 and will apply retrospectively from 2 March 2020.

Under the special ‘Working from Home Arrangements’ an employer will be able to reimburse an amount of up to £8 per week or up to £35 per month without reporting it through the payroll.  In effect, an amount below these levels will qualify for automatic dispensation.

Under the Working from Home Arrangements the employer will not have to justify the amount paid to each employee provided that it is equal to, or less than these amounts, and the employee does not have to keep any records to demonstrate that they incurred the additional expenditure.

An employer can make greater weekly or monthly payments to the employee, but these would fall outside the Working from Home Arrangements.  Payments in excess of the ‘Working from Home Arrangements’ flat rate should be considered as remuneration and reported via the payroll.

Provision of Assets/Services for Use at Home

The provision of assets and services for use at home are not included under the Working from Home Arrangements.  These should be dealt with in line with the normal benefit in kind rules.

Administration

Employers are not required to make a claim to the Assessor before making payments under the Working  from Home Arrangements.  Provided that the conditions above are met for the period in which the payments are made:

  • the payments can be made without them being reported via the payroll, and
  • the payments will not constitute taxable remuneration in the hands of the employee (the employee must not also make a claim for relief for the expenses that they incurred).

Please see the below tax note for information and contact details for any questions

Employees Working from Home COVID-19