Before the Government U-turn, many employees had started to return to office-based jobs. Where the employee had previously worked from home and had been provided with homeworking equipment, there may be tax implications to consider if the employee is allowed to keep the equipment for personal use.
The tax implications will depend on the way in which the equipment was made available to the employee.
Employer provided the equipment
If the employer provided equipment to enable the employee to work from home, no tax charge arises in respect of the provision, as long as the main reason for providing the employment was to enable the employee to work from home, any private use is insignificant and the employer retains ownership of the equipment. This remains the case if the employee retains the equipment to enable them to work from home on a more flexible basis.
If, at the end of the working from home period, the employee simply hands back the homeworking equipment to the employer, there are no tax implications. However, if ownership of the equipment is transferred to the employee, there will be tax to pay unless the employee pays at least the market value at the date of transfer for the equipment. The amount charged to tax is the market value of the equipment at the date of transfer, less any contribution from the employee.
Employer reimburses the cost of the equipment
At the start of lockdown, many employees were required to work from home at very short notice. As a result, it was often easier for the employee to buy their homeworking equipment, and the employer to reimburse the cost. The reimbursement is tax-free as long as the employee acquired the equipment to allow them to work from home and any private use is insignificant.
However, if the employee buys the equipment, the title remains with the employee (unless it is transferred to the employer as a condition of the reimbursement). Consequently, if the employee no longer needs to work from home when they return to the office, but keeps the equipment for personal use, there is no tax charge – the employee is simply keeping equipment they already own.
Employee buys equipment
If the employee buys their own homeworking equipment and the employer does not meet the cost, the employee can claim tax relief for their expenditure. If the employee uses the equipment personally once they return to the office, there are no associated tax implications as the employee already owns the equipment.
Partner note: ITEPA 2003, ss. 206, 316; Employer Bulletin June 2020.