When your employees return to the office, they may no longer need the homeworking equipment that enabled them to continue to work during lockdown and beyond. Are there any tax implications if they return the equipment or if they keep it?
If you provided equipment to enable your employees to work from home, as long as you retained ownership of that equipment, there are no tax implications if the employee returns the equipment to you when they come back to the office.
For many, the experience of working from home has highlighted the benefits of flexible working. You may want your employees to be able to continue to work from home on a more flexible basis once the office is open, and for them to keep their homeworking equipment to enable them to do so. As long as you have not transferred ownership of the equipment to the employee, and the equipment continues to be provided predominantly to enable them to work from home, the provision remains tax-free – there is no taxable benefit and nothing to report to HMRC.
Should your employees no longer need to work from home and you let them keep the homeworking equipment for personal use, a tax charge will arise. The employee is taxed on the market value of the equipment, less anything that they pay for it. The benefit must be notified to HMRC on the employee’s P11D. However, if the employee buys the equipment from you for at least its current market value, there is no taxable benefit and nothing to report to HMRC.
The requirement to work from home where possible was implemented at very short notice. Consequently, it may not have been feasible for you to provide your employees with the equipment that they needed to work from home.
If, instead, your employees purchased homeworking equipment and you reimbursed them, there is no tax for them to pay on the reimbursed amount, as long as the equipment was purchased to enable them to work from home. Unless you required the employee to transfer ownership of the equipment to you, the equipment remains the employee’s equipment. Consequently, there is no tax charge if they keep it for personal use once they return to the office.
It may have been the case that your employees bought whatever they needed to be able to work from home and you did not meet the costs. In this situation, the equipment belongs to the employee and this remains the case if they keep it for personal use when they return to the office. There are no tax implications of employees keeping their own equipment.
Guidance on the tax treatment of homeworking equipment can be found on the Gov.uk website.
We can help you to determine the tax implications surrounding the future of homeworking equipment once your employees return to the office.