Following massive increases in energy costs HMRC has increased their guideline rate for employers' tax and NIC free payments to homeworking employees.

From 6 April 2008, it has increased the tax and NIC free guideline rate employers can pay home working employees without keeping records from £2 to £3 per week.

Under S 316A ITEPA 2003, employers can reimburse their employees who work regularly from home for the additional household expenses they incur without incurring an extra tax or NICs charge. The additional expenses that the employer may reimburse are those connected with the day to day running of the employee’s home. This might include additional costs of heating and lighting the work area, or additional insurance costs.

Because it might be difficult for employers to calculate the exact additional costs, HMRC published a guideline rate that can be paid without the employer having to justify the amount paid or the employee having to keep any records to demonstrate the additional expenditure. The guideline rate is not a maximum amount and greater amounts can be paid where there is evidence to justify them.

Self-employed homeworkers
The £3 rate does not apply to the self-employed but HMRC has previously agreed that the old rate of £2 may be claimed as an estimate where a self-employed person does some work from home. One assumes that this may now be increased to £3.