When an employee works at home for some or all of the time, he or she may incur additional household costs, for example in heating and lighting. The employer may make payments to the employee tax free and without any liability for NICs to help to meet those additional costs.

The employer can pay up to £2 per week (£104 per year) without obtaining any supporting evidence of the additional costs. The employer can pay more than that where evidence is retained to show that the amount paid is no greater than the additional costs incurred by the employee.

Scale rate payments that reimburse the average expenses met by employees working at home can be paid tax free and without any liability for NICs if the amount has been agreed by an Officer of HMRC.

Level 3 Table of Contents