How long-term homeworking could affect your finances
How long-term homeworking could affect your finances
There’s a creeping likelihood that many workplaces will never return to the office. At least not in the same way as they did before the pandemic.
Several big-tech firms have declared their staff can now continue to work from home even after this crisis has concluded and the evidence suggests a large number of other employers are thinking the same thing.
A survey by the Chartered Institute of Personnel and Development shows that employers expect the proportion of people working from home regularly after the crisis will rise to 37 per cent, compared with 18 per cent before the pandemic.
Employers also think the proportion of staff who work from home full time will rise to 22 per cent post-pandemic, compared to just 9 per cent before the lockdown.
Working from home has some obvious benefits – the time saved, the ability to walk the dog at lunchtime – but it also has downsides, like the risk of loneliness and the extra barriers to communicating with the rest of the team.
But what are the financial implications? And are they good or bad? Here are some of the things you need to consider.
You can claim tax relief on job expenses
Many employees who have been suddenly thrust into homeworking may be unaware that they can claim expenses for their homeworking time.
From 6 April this year, the chancellor Rishi Sunak raised the claim allowance to £6 a week to cover household bills incurred as a result of working remotely.
Ian Dickinson, the tax director at UHY Nottingham, said: “It is an established practice that where there is a home working arrangement in place, an employer can pay a weekly amount to its employees tax-free without scrutiny or challenge.
“If, as an employee, you think your costs exceed this amount, then you will need to check with your employer as to whether they will make payments of the higher amount.”
However, this is a benefit that will probably only be available if your employer actively decides to ask staff to work from their homes.
Official government guidance is that if you’ve agreed with your employer to work at home voluntarily, or you choose to work at home, then you cannot claim tax relief on the bills you have to pay.
You should double check your insurance
Homeworking during lockdown may have been an unexpected event but now the dust is settling you should mention it to your home insurer if you’re planning to carry on.
If your home now has an extra computer, printer, tablet and more, their values need to be covered by your home insurance policy. If that kit belongs to your employer their insurance should protect it, so double check first.
Many people have set up businesses during furlough or lockdown and if you’re running a new business that’s operating out of your home then you should really talk to your insurer as soon as possible. That’s particularly true if people are visiting you.
And if you end up working from home, and no longer using your car to commute or doing far fewer miles then speak to your car insurer too. You may be able to pay less for your premiums as a result.
Your costs could go down… (but so could your income)
Working from home can mean substantial savings on commuting. If you regularly catch a train into a city, for example, that can mean commuting costs of thousands of pounds a year.
But just keep in mind how your boss might react to these savings – one social media giant has already mooted paying homeworking staff less if they live in a cheaper area.
That might be hard to imagine here in the UK but it’s easy to see that a London-headquartered company may not be so keen to pay London weighting to staff who don’t have the expense of living in the city.
You may have to work harder for a pay rise
We’ve seen in lockdown that working from home doesn’t have to negatively affect the quality of people’s work. What we haven’t had enough time to really find out is whether homeworking has any impact on workers’ ability to impress their managers and secure promotions and pay rises.
Rosanna Williams-Wood, the career mentor behind The Secret Coach, says it’s important to keep that in mind: “If the culture was one of presenteeism pre-Covid you will need to engage more frequently than feels natural. Keeping relationships, as well as the business objectives, front and centre is the key.
“Actively create a chance to communicate by voice or video to engage with others, messaging and emailing is simply not enough to foster meaningful relationships.”
Viana Maya, the lead talent development coach at pRESPECT, says it’s even more important to keep a record of your work and communicate that with your boss.
“Create a task/to do on your calendar that is shared with your manager,” she advises. “This way all your daily work-related accomplishments are viewed. Communicate any new skills you have learnt to boost your productivity. Show how personal development is supporting you to do your job effectively at home.”
It could affect your property price
Even if you don’t end up embracing the homeworking revolution, there’s a chance it could still have a significant financial impact. The changes on a national level could affect house prices.
Research from the Guild of Property Professionals shows that before lockdown, Brits were willing to live an average of 23 miles away from their workplace. Post-lockdown, they would live an average of 56 miles away from their company office.
That could dramatically affect property prices around the urban hubs.
It might help women’s finances
So far, lockdown has not been great for women’s finances. They have been shown to be more likely to cut their hours to provide childcare and home schooling, and there’s also evidence they have been more likely to lose their jobs than men.
But once this crisis is over, a rise in homeworking could help rebuild some of that lost ground – for office-working women at least.
Maike Currie, investment director at Fidelity International, says that despite initiatives like shared parental leave, women are still the most likely to take career breaks, reduce their hours or cease working entirely to provide care to children or relatives, giving them a financial disadvantage.
“However, having greater flexibility in the way we all work could help, with parents saving time and money on commuting and sharing responsibilities more equally. When that happens, women can start to reclaim some of that earning potential that may have been missed when focusing on taking care of the family.”