e-Working & Tax
The days of the traditional workday and workplace are now distant memory for many. Whether it is employer or employee led, when it works there can be benefits for both such as:
- Work life balance.
- Less commuting.
- Increased productivity with less disruption.
- More family time.
So how does one account for costs and expenses incurred while working from home when it comes to paying tax? Revenue have recently issued their updated guidance on e-Working. It is worth noting that these arrangements do not extend to employees who, in the normal course of employment, bring some work home in the evening, or at weekends, etc.
Generally, e-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.
- working at home on a full-time or part-time basis
- working some of the time at home and the remainder in the office
- working while on the move, with infrequent or occasional visits to the office.
- working for substantial periods outside the employer’s premises
- logging onto the employer’s computer remotely
- sending and receiving email, data or files remotely
- developing ideas, products and services remotely
Computers & other Additional Equipment
Under an e-working arrangement an individual’s employer may provide equipment, such as computers, printers, software etc to enable him or her work from home. Where the provision of such items is primarily for business use, a Benefit-In-Kind (BIK) charge will not be imposed on the employee in respect of incidental private use.
Telephone & Broadband
The provision of a telephone line, broadband, etc. for business use will also not give rise to BIK.
The provision of other equipment, such as office furniture, etc., by the employer to enable the employee work from home will not attract BIK where the equipment is provided primarily for business use.
e-Workers will incur certain expenditure in the performance of their duties from home, such as additional heating and electricity costs. Revenue allows an employer to make payments up to €3.20 per day to employees without deducting PAYE, PRSI, or USC. This does not prevent an employee making a specific expense claim where the actual expenditure incurred is in excess of this amount.
Travel & Subsistence
Travel & subsistence payments may be paid in accordance with the prescribed Revenue rates and guidance.
If the employee works part-time in the office and part-time at home, the work base is the office. Expenses may not be reimbursed tax free in relation to travel between a person’s home and their place of work. Likewise subsistence expenses may not be paid without deduction of tax in respect of periods spent in an individual’s home.
Capital Gains Tax (CGT)
Where an e-Working employee uses any part of his or her home for e-Work purposes, the CGT exemption for Principal Private Residences will not be restricted.
Local Property Tax (LPT)
There is no reduction to LPT due on a residential property in relation to the owner using a room in their home to carry out work-related activities.
Records of payments made must be retained by the employer for the purpose of a Revenue Audit.