New guideline rate for homeworkers

Date: 17th April 2008

HM Revenues and Customs (HMRC) has increased the amount employers can reimburse homeworkers without incurring additional taxation.

In response to increasing energy prices, employers will now be permitted to repay homeworkers £3 per week instead of £2 for the costs incurred through working from home, such as lighting and heating in a work room, according to AccountingWeb.

This amount - which came into effect on April 6th - will be exempt from taxation and National Insurance Contributions (NICs) liability under S 316A ITEPA 2003, with greater amounts paid to homeworkers also exempt if justifiable.

HMRC has also published a total guideline rate that can be paid taxation and NIC-free, for companies who may struggle to work out a weekly-by-week rate.

All employers are required by law to use the NIC accountancy system for themselves and their staff, with the Pay As You Earn method the most popular form.