Should remote working be taxed?

A report out earlier this week proposed a tax on remote working to help pay for the transition to a more widespread hybrid working culture and support commuter-serving businesses, but it raises many questions about potential consequences.

Working at home with flexible working

 

A report earlier this week put forward a proposal to tax those who work from home and use the money to help the small businesses such as sandwich sellers who are losing out due to the switch to remote working. The report, from Deutsche Bank, implied there was some sort of moral duty on individual remote workers to help low income workers in commuter-serving businesses who have had to run the risk of getting the virus in order to work during the pandemic. There’s a sense that people who work from home should feel a little bit guilty about it, particularly if they go on doing it after Covid, even if only for a few days a week.

The report envisages the tax would only apply outside the times when the government advises people to work from home and would exclude the self-employed and those on low incomes. It would be paid by the employer if it does not provide a worker with a permanent desk. If the employee has a desk and chooses to work from home – full or part time – they would pay the tax.  It says that no-one will lose money because homeworkers save on commuting costs, things like sandwiches, clothes, cleaning and socialising. They will also be safer, it says, and have greater flexibility and job security.

It’s an interesting idea, though I’m not sure all those benefits add up and it seems to be written from the perspective of a particular type of City worker. Are work from home jobs more secure than others, for instance? Moreover, higher rates of domestic abuse during Covid suggest that working from home is not always the safer option. What about people whose commuting costs are subsidised by their employer and things like London weighting which takes account of the added costs of commuting? Would those also have to change? We’re still waiting too for the widespread adoption of flexible season tickets which don’t penalise hybrid workers and remote workers who have to come in for meetings.

While people probably do generally spend more if they commute on snacks and food, what if you’ve always brought your own packed lunch in and what if you don’t wear a suit so don’t run up dry cleaning bills? Early research suggests businesses in feeder towns have seen a positive impact from Covid of people working where they live – presumably people are still going out for coffees and lunch, going to the hairdresser etc when they work from home, although maybe less frequently.

Another issue is the added costs of homeworking: what if your employer doesn’t help with the cost of homeworking, such as the outlay for office equipment, repairs, heating, phone bills and so forth? As it stands, there is very little besides guidance on employer obligations towards remote workers. Employers or employees can claim tax relief of up to £6 per week for expenses including business telephone calls and the extra cost of gas and electricity for their work area, although employers are not obliged to do this and unions says for basic rate tax payers the sums involved are as low as £1.20 a week and require evidence to back up higher claims. Imposing a homeworking tax on employers may make them more likely to avoid covering these costs and to pass the tax costs onto home and hybrid workers, meaning they earn less than their office counterparts and reinforcing the kind of two-tier system we’ve seen in the past.

There are a growing number of people who have been working from home for a while, many of whom – mainly women – will have taken pay cuts to do so because back in the day it was considered that employers were doing people a favour by letting them work from home, even though they were doing exactly the same amount of work as in the office [or more, in my experience]. Many will have been passed over for promotion due to the greater visibility challenges of being recognised and promoted when working remotely.

As a result of Covid, many people who were used to the daily commute have had to switch to remote working. In many cases that has shown managers that it is not such a challenge, although, clearly remote working is not for everyone or not for everyone all of the time. What the last months may hopefully do is normalise remote working so that more new jobs are advertised as being possible from home, processes are put in place to avoid the invisibility challenge and people don’t have to consider pay cuts and career changes to get the flexibility they need.

Perhaps I am being unfair with all the questions I am raising and certainly something needs to be done to support the transition that may be coming towards more hybrid forms of working and their impact on commuter-serving cities. However, I feel that a good place to start with discussions about remote working would be to listen to those who have actually done it for a while, rather than just over the last few months, to get a more rounded view of the pros and cons.



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