Employer considerations if paying employee €3.20 per day allowance
e-working is where your employee works either
- at home on a full time or part time basis or
- part of the time at home and the remainder in the normal place of work
- logging onto a work computer remotely
- sending and receiving email, data or files remotely
- developing ideas, products and services remotely
- working for substantial periods outside your normal place of work
e-working does not apply to workers who bring work home outside of normal working hours.
Employer can make a payment of €3.20 per workday to cover heating and electricity costs to an e-working employee without deducting PAYE, USC or PRSI.
Employer can make the payment of €3.20 per workday tax free when
- there is a formal agreement between employer and the employee that the employee is required to work from home
- employee is required to perform essential duties of the employment at home
- the employee is required to work for substantial periods at home
Any amount higher than €3.20 per workday must have tax deducted.
Employer must retain records of payments for a period of 6 years.
Employer may provide any of the following to an e-working employee for business use without the employee incurring BIK once private use is minimal:
- computer or laptop
- software to allow you to work from home
- telephone, mobile and broadband
- office furniture.
Employee considerations if employer not paying or only part paying employee €3.20 per day allowance
Where an employer does not pay €3.20 per day to an e-worker, the employee is not entitled to claim a round sum of €3.20 per day.
However, employees can claim a deduction for actual vouched expenses incurred wholly, exclusively and necessarily in the performance of the duties of their employment under S.114 TCA 1997.
Where an employee decides to make an expense claim, any reimbursement of expenses by the employer (such as the €3.20 per day rate) should be deducted from such a claim.
Employee needs to apportion between use for employment purposes and private use of their heating, electricity and broadband costs.
Revenue are willing to accept that the average proportion of the house bill costs attributable to a home office is as follows;
- Electricity & Heat – 10% of cost of electricity and heat apportioned on the basis of the number of days worked from home over the year.
- Broadband – 30% of the cost of broadband apportioned on the basis of the number of days worked from home over the year. This concession, commencing in tax year 2020, will apply for the duration of the pandemic.
- Other vouched expenses where they are “wholly, exclusively and necessarily” part of your work
Employee can claim expenses through either a Form 11 or Form 12 Tax Return
Employee must retain all documentation relating to a claim for six years.
Subsistence is not allowable for employees from home to office and office to home travel (normal daily commute). Also, the subsistence day allowance would not be allowable when employee is working from home. Employee cannot claim subsistence and €3.20 in the same day.
Further information and worked examples for employees and employers:
Please note the above information covers e-working only which is specific to employees. For sole traders, partnerships and directors, different rules apply.
If there are any queries or if you require assistance on the above, please do not hesitate to contact us.