Surrey-based accountancy firm, TWP, has cautioned workers over the potential tax implications of the rise in flexible working – as almost two-thirds of people now occupy a flexible or partially flexible role.

The challenge, said the firm, lies partially in the fact that ‘flexible’ encompasses a wide range of working arrangements which may have vastly different tax treatments depending on the employee’s income, status and way of engaging with their employer.

Emma Strugnell, Client Payroll Manager at TWP, said: “Working flexibly or remotely has become much more ‘the norm’ in the past few years – but many individuals and employers remain ignorant of the potential tax implications.

“There’s been a major push recently towards a day-one legal right to request flexible working, which could see another major influx of flexible workers.

“As a result, we’re likely to see an even greater diversity in the type of arrangements requested and associated tax liabilities.”

Reduced hours, annualised hours and remote working are among the most popular requests, said the firm, as workers seek a better work-life balance and balance with family commitments.

However, it warned workers making these requests that they may face paying more tax if they take on reduced hours, for example, and a subsequent reduction in gross salary is not properly reflected in payroll systems.

Conversely, remote workers may be able to claim tax reliefs on business-related expenses if they meet certain criteria, such as living far away from the office – including relief on the cost of business phone calls and gas or electricity for a home office.

Emma continued: “Employees assume that, because they generally pay tax through PAYE, a change in working conditions won’t create a tax liability that impacts them, but we know this isn’t true.

“Additionally, employers should be aware of this and make employees aware, as well as making sure that their payroll systems reflect an employee’s correct tax treatment.

“If there’s any confusion or questions, I’d urge employers to get in touch with us to find out how they can best support employees with optimised tax arrangements.”