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Work From Home Allowance

What is a Work From Home Allowance?

In a growing number of countries, governments as well as employers recognise that people incur additional expenses as a result of working from home. One way to negate some of those expenses is to offer monetary stipends. Depending on the country where they’re offered, such allowances may be legally compulsory and may or may not be taxed. In other cases, an organisation may choose to offer such ‘bonuses’ to their employees as a perk of the job and to attract applicants. These specific income sources are known as work from home allowances.

A work from home allowance is a monetary benefit provided to employees who are working remotely or from home to cover some of the additional expenses associated with setting up and maintaining a home office or remote work environment.

Work from home allowances could both include one-off expenses such as ergonomic setup, as well as help cover smaller, consistent expenditures incurred by remote workers. Some examples of common expenses that may be covered and included in a work from home allowance scheme are electricity, heating, broadband internet access, mobile phone plans, or the purchase of office supplies like paper, staples, and so on. An organisation or local government may also choose to offer taxable benefit stipends or subsidies to workers for things like childcare.

Remote work allowances are generally fixed amounts and may be paid in lump sums every month or year, or they may be paid as reimbursements after an employee has covered an expense out of their own pocket. These two classifications are important because they may affect how a given organisation or employee is taxed.

Work from home allowances and taxes

Depending on the country, work from home allowances may be considered taxable income because they’re viewed as monetary gains earned by a tax-resident worker. However, in some countries, there are provisions that at least some of the sum is tax-free. For example, in Ireland, workers can be paid up to €3.20 per day without paying any tax through a tax-relief initiative called eWorking.

Either way, it’s vital that the employer be fully aware of the regulations and requirements regarding work from home allowances, as well as the implications of providing (or failing to provide) them to workers.

Is there a difference between a work from home stipend and a remote work allowance?

The terms 'remote work stipend' and 'remote work allowance' are often used interchangeably, but the correct term is ‘remote work allowance’.

Every company structures their remote work allowance policies differently. Some choose to provide them as lump sum payments or bonuses and are not necessarily tied to specific expenses. Other circumstances may result in a one-time financial provision given by an employer to employees who work remotely. These allowances may be intended for the purchase of items to enhance a home office setup such as a special desk, ergonomic chair, or additional equipment, such as an extra computer monitor.

Depending on the situation and the intentions for the provided allowance, employees may have a great deal of flexibility in how they use their allowance to address their remote work needs. Other companies may develop more rigid structures and allowances may be intended to cover certain categories of expenses related to remote work.

Each company should outline how these allowances can and should be used in their remote work policy.

Tracking work from home allowances with Boundless

A work from home allowance is a way for employers to acknowledge and support expenses for employees working outside the business’s primary location. Providing these stipends demonstrates a commitment to employee well-being, job satisfaction, and an acknowledgement of the unique challenges of remote work.

As part of our global employment solution, when you employ people through Boundless, we will be at hand to help with your remote work allowances in each jurisdiction. Connect with one of our experts and learn more about your options.

The making available of information to you on this site by Boundless shall not create a legal, confidential or other relationship between you and Boundless and does not constitute the provision of legal, tax, commercial or other professional advice by Boundless. You acknowledge and agree that any information on this site has not been prepared with your specific circumstances in mind, may not be suitable for use in your business, and does not constitute advice intended for reliance. You assume all risk and liability that may result from any such reliance on the information and you should seek independent advice from a lawyer or tax professional in the relevant jurisdiction(s) before doing so.

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