Could you pay extra tax for working remotely?

Could you pay extra tax for working remotely?

 · 4 min read
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A recent report by analysts at Deutsche Bank has proposed a new tax on employees who voluntarily work remotely, to sustain the livelihoods of employees for whom remote work is not a possibility.

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A recent report by analysts at Deutsche Bank has proposed a new tax on employees who voluntarily work remotely, to sustain the livelihoods of employees for whom remote work is not a possibility.

The proposal suggests a 5% tax on the salary of each employee who chooses to work remotely, paid directly by employers. It would not apply to the self-employed or people on low incomes. Neither would it apply to people who are required to stay home for a public health emergency, or for specific medical reasons. Deutsche Bank proposed that funds obtained through this tax could be used to support workers who are unable to resume their roles during future events similar to the ongoing pandemic.

In the UK a tax of 5% on the average salary of £35,000 would generate around £6.9 billion per year. The Bank proposes that the government could use this amount to pay out grants of £2,000 a year to low-income workers and those under threat of redundancy.

"Quite simply, our economic system is not set up to cope with people who can disconnect themselves from face-to-face society.”, said Deutsche Bank strategist Luke Templeman. "For years we have needed a tax on remote workers. COVID has just made it obvious.”

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The increasing trend towards remote work

Arguably one of the most significant cultural shifts as a result of the ongoing COVID-19 pandemic has been the transition towards remote working for employees around the globe.

While the implications of working remotely seemed initially uncertain for many, the change appears to have since been welcomed by an increasing number of employers and employees alike, both pushing for a more permanent shift to remote working in the long term.

In fact, a recent survey by Finder revealed that 65% of workers felt more productive in a home office than a regular office. The same survey estimated that the average employed worker could save around £45 every week by working from home.

While working from home can provide such benefits as improved work-life balance, increased productivity, and higher savings for employees, it is more difficult for specific roles to translate to remote working. Employees in the travel, retail, manufacturing and hospitality sectors, for example, have been unable to reap the benefits of remote working during the pandemic, instead, being furloughed, or worse, laid off by employers.

This new proposal aims to address the fact that people who can voluntarily work from home are more privileged than those whose livelihoods depend on a commute to a physical workplace. The tax on remote workers would aim to bridge this gap and bring about a balance in the economy.

While it is in most people's instinct to reject the thought of another tax, some may view it as an exciting policy that lets governments redistribute some of the gains from the pandemic, which have benefitted only certain people, while others have suffered for it.

Indeed, when one considers the growing number of cases and the tightening government restrictions, it may be some time before some employees can return to their everyday lives. In this harsh economic environment, any financial support forthcoming could make a difference to thousands of families across the country trying to make ends meet.

Rhea Tibrewala
Rhea Tibrewala
Rhea joined Age Group in 2020, bringing over 5 years of experience of working in and writing about the finance sector. She is a tech fanatic, an avid reader, and enjoys travelling and listening to music in her free time.
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