From 6 April 2003 employers have been able to make tax free
payments to meet or reimburse the additional household costs
incurred by employees who work at home under homeworking
arrangements. The legislation is in Section 316A ITEPA 2003 and
there is guidance on the exemption at
Section 316A only provides an exemption for employer payments. It does not change the law on deductions for employees’ unreimbursed household expenses. The circumstances in which an exempt payment can be made are much less restrictive than the circumstances in which an employee is entitled to relief for household expenses under Section 336. In particular, exempt payments can be made to employees who work at home under a voluntary homeworking scheme. So the fact that an exempt payment has been or could be made does not mean that the employee is entitled to relief for household expenses.
The examples at EIM32830 illustrate the inter-action between the deduction for an employee’s unreimbursed homeworking expenses (Section 336) and the separate exemption for homeworking payments reimbursed by the employer (Section 316A).