Working from home payment incorporated into base salary.

pernes

Hi, sorry if on wrong board, wasn’t sure how to categorise 
we have recently been advised that our working from home payment’s are being incorporated into our base salary, becoming part of our overall terms and conditions. Previously the amount has been recorded separately on our payslips. Apart from no longer seeing the amount being paid for home working Will this have any implications for tax? Thanks 

eskbanker

Anything incorporated into base salary will be taxed at your marginal rate, so hopefully the adjustment recognises this!

pernes

Thanks for your reply. Am I right in saying that previously these payments wouldn’t have been taxed? 

Bookworm225

pernes said:

Thanks for your reply. Am I right in saying that previously these payments wouldn’t have been taxed? 

it depends
they should not have been taxed if you were required by your contract of employment to work at home

they would have been taxed if you work at home from personal choice rather than employer forces you to

penners324

Bookworm225 said:

pernes said:

Thanks for your reply. Am I right in saying that previously these payments wouldn’t have been taxed? 

it depends
they should not have been taxed if you were required by your contract of employment to work at home

they would have been taxed if you work at home from personal choice rather than employer forces you to

If it's from the employer then it's taxable income. 

Bookworm225

penners324 said:

Bookworm225 said:

pernes said:

Thanks for your reply. Am I right in saying that previously these payments wouldn’t have been taxed? 

it depends
they should not have been taxed if you were required by your contract of employment to work at home

they would have been taxed if you work at home from personal choice rather than employer forces you to

If it's from the employer then it's taxable income. 

it is tax free if it is a valid expense under the right circumstances

chrisbur

https://www.gov.uk/government/publications/cwg2-further-guide-to-paye-and-national-insurance-contributions/2024-to-2025-employer-further-guide-to-paye-and-national-insurance-contributions

5.5.1 Payments towards additional household costs incurred by employees who work from home

For both PAYE and National Insurance contributions purposes

Do not include in gross pay any payments made in respect of reasonable additional household expenses incurred by employees in carrying out duties of their employment at home.

You may pay up to £6 per week (£26 per month) without supporting evidence of the costs.

If you choose to pay more, you must retain supporting evidence to show that the payment is wholly in respect of additional household expenses incurred by the employee in carrying out the duties at home.

sheramber

we have recently been advised that our working from home payment’s are being incorporated into our base salary, becoming part of our overall terms and conditions. 

Is it still a wfh payment or is it an increase in salary  to cover the amount previously paid as an additional amount?

DullGreyGuy

eskbanker said:

Anything incorporated into base salary will be taxed at your marginal rate, so hopefully the adjustment recognises this!

However it will also be considered as part of your salary for calculating the Employers Pension contribution, Bonuses, Flexible Benefits, Payrises etc, depending on which of those are applicable to your setup