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Taxation of home working equipment during Covid-19

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Increased home working arrangements during the Covid-19 pandemic have shone a fresh light on the taxation of home working equipment. There is a limited tax exemption for home working equipment provided by employers for the sole purpose of enabling the employee to perform their employment duties. As a general rule, the cost of reimbursing employees for the purchase of home working equipment is taxable, unless the restrictive conditions of ITEPA 2003 s 336 are satisfied. However, a temporary income tax exemption and NIC disregard have now been introduced for reimbursements of such costs by employers between 16 March 2020 and 5 April 2021. Whilst the introduction of the temporary exemptions are welcome, employers must take care to ensure all the relevant conditions are met, and they would be wise to devise and communicate appropriate policies.

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