Remote working tax relief could be worth about €100 a year for some workers

Up to 400,000 people could benefit from the increased tax relief provision for those who are working from home announced in the budget, the Government believes.

However, official estimates suggest that based on an individual working remotely for 100 days a year, paying the top rate of tax and having average utility costs, the net amount they would receive under the scheme would be about €100 a year.

Minister for Finance Paschal Donohoe said the Government would introduce an income tax deduction amounting to 30 per cent of the cost of vouched expenses for heat, electricity and broadband incurred while working from home.

Official Government estimates suggest that, up to the end of May, about 69,500 claims for the existing, lower tax relief had been lodged in respect of broadband, light and heat expenses related to working at home. This equated to about €136 per claim.

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Informed sources said that based on people working 100 days a year at home, average annual electricity costs of €1,500, heating €1,000 and broadband €576, a household could claim on average €252 each year. Assuming the claimant was paying the top rate of tax, the net benefit would be about €100.

Speaking after the budget announcement, Tánaiste Leo Varadkar said the measure could allow people who were working remotely to make claims of a couple of hundred euro annually.He said there was no cap on how much can be claimed, though he didn't rule one out in the future. He encouraged people to avail of the enhanced support saying there has been an "underclaim" of the existing relief.

The Government projected the measure could cost €11 million in a full year.

Trade unions warned they would be watching to see if the planned tax changes discouraged employers from contributing towards heating and electricity costs for staff working remotely, “and instead effectively pass the responsibility on to the public exchequer”.

Fórsa, the State's largest public service trade union, said existing rules allowed employers to pay an allowance of up to €3.20 per day, with no tax liability for the employee. The union's general secretary Kevin Callinan said: "Remote working brings benefits to employers too, and it's not credible to expect staff to take on significant costs that are currently borne by their employers, particularly when fuel costs are spiking as we enter the colder months.

“But our priority is to ensure that objective and transparent criteria are established to determine which roles are suitable for remote working, and that these are applied fairly when people seek blended working arrangements.”