We know that working from home shifted energy costs from employers to workers.
This means that with the new cap announced by Ofgem, workers are now being recommended to consider the cost of their commute against the rising price of energy.
Continue to read to check how these changes will affect you in the future!
Ofgem, the energy regulator for the UK, announced last week that the energy price cap will increase to £3,549 per year for dual fuel for an average household from 1 October 2022.
In addition to this increase in energy prices, people are now spending more time at home, following the shift to remote work, which will substantially increase the cost of living even more.
According to the Office for National Statistics, half of the working population was working remotely during the pandemic and 84% of these plan to continue.
Thus, to continue to work at home, these workers face enormous costs. At the new price cap, an 8-hour day of working from home could quickly cost more than £30 a day, which doesn’t even include services as broadband connections.
The largest of these costs will be heating, which can cost £3.60 an hour to run, while a 32kW boiler will cost £4.80 an hour. When it comes to electricity, a desktop PC and monitor will cost £1.25 a day to run for eight hours.
Therefore, commuting by car will be a cheaper option for anyone who lives less than 30 miles from their workplace, as the current cost of diesel fuel is now at 47p per mile, in accordance with NimbleFins.
While some employers will encourage this, for others it can mean another increase in running costs.
Don’t Pay UK - What are the consequences for not paying your energy bills?
It’s important to note that unfortunately for millions of people in the UK, this won’t be a matter of choice, as more than half of UK households could be pushed into energy poverty. This is why a new campaign called Don’t Pay UK is demanding the government to deliver affordable energy for all.
As the average electricity and gas bills will rise by 80% compared to April, tens of thousands of British are threatening not to pay if energy prices aren’t cut.
The organisation says it wants one million households to refuse to pay their bills from October, when the price is increasing. According to Cornwall Insight, the prices will rise again to £5,387 in January 2023 and £6,616 in April 2023.
Don’t Pay UK also mentions recent results announced by the energy companies, which show huge rises in profits, as well as hefty dividends or share buyback schemes.
But what happens if you refuse to pay your energy bills?
According to Citizens Advice, if you cancel your direct debit, energy companies’ first move will be to give you a notice and then to transfer those who don’t pay onto a prepayment meter, which is the most expensive way to pay for energy.
After this, they may disconnect your energy supply, although Citizens Advice say this situation is very rare, since it requires a warrant to enter people’s homes.
It’s important to note that, unfortunately for millions of people in the UK, this won’t be a matter of choice, as more than half of UK households could be pushed into energy poverty.
How the working from home tax rules can help with your energy costs
If you work from home, there are some tax benefits that might help ease some of the costs for you (including energy costs!):
1. Are you employed? Then, ask your employer to help.
It's up to employers if they want to make payments for additional costs incurred for working at home. But, as these payments are tax-exempt, that may encourage some to make them!
So if you don't currently receive anything from your employer, it's probably worth asking them about it.
2. Claim flat rate tax relief
Did you know that you may be able to claim tax relief on £6 a week for the cost of energy and other costs related to working at home? While this isn't as good as getting the full amount you pay paid back by your employer, it's an option if you want to get some of this money back. You don't need to keep receipts for this.
Remember: to claim this, you must be required to work from home, so this only applies if your employer doesn't have an office or if this is written in your contract.
3. Claim actual costs
A third option is to claim tax relief on the actual costs. You will have to keep receipts for your utility bills (such as gas, electricity and internet) and identify how much was used while working at home, which means it's a little bit more laborious than claiming the previous tax relief. At the same time, it could mean a larger amount received.
Claiming your tax refund doesn’t need to be stressful.
If you need help claiming your working from home costs, we can help you.