Banking giant suggests 5% working from home tax for businesses

As part of its latest Konzept edition, Deutsche Bank has suggested introducing a 5 per cent tax on employees working from home

A 5 per cent ‘working from home’ tax should be imposed, according to a new report from Deutsche Bank.

The tax itself would be paid by the employer if the employer does not provide a worker with a permanent desk. If it does, and the staff member chooses to work from home, the employee would pay the tax out of their salary for each day they work from home. For someone on a £35,000 salary, it works out at around £7 a day.

Deutsche Bank’s report says that the income from this tax would be paid to people who can’t do their jobs from home. The banking giant points out that since those working from home, these employees are saving money and taking less risk by not going to work, so a tax would help to redress the balance.

It calculates that the tax would generate an income of £6.9bn a year in the UK. This in turn could pay out grants of £2,000 to low-income workers and those who are under threat of redundancy.

The report is part of the bank’s ‘Konzept’, an ongoing project to spark debate around important topics.

“For years we have needed a tax on remote workers,” said Deutsche Bank strategist, Luke Templeman. “COVID has just made it obvious.”

“Those who can WFH receive direct and indirect financial benefits and they should be taxed in order to smooth the transition process for those who have been suddenly displaced.”

The 5 per cent tax rate “will leave them no worse off than if they had chosen to go into the office”. The report goes on to say that the daily £7 sum “is roughly the amount an office worker might spend on commuting, lunch and laundry”. However, this may not be true for those who cycle or walk into work and/or bring their own lunch. The shortfall could also be going into businesses which are local to where these employees are working rather than being concentrated in city centres.

Though the report suggests that companies may be better off with the savings from downsizing their offices.

The tax could also act as a deterrent from WFH, where employees may be more productive, potentially having a ripple effect on the company’s overall productivity and output.

Not for the self-employed and those on low incomes

Deutsche Bank want to make it clear that this tax would be for employees who work from home, suggesting that they earn higher incomes than average. It wouldn’t apply to the self-employed or those on low incomes. It also wouldn’t apply if workers who have to stay home as part of a public health emergency or for other medical reasons.

Some are less than impressed around the suggestion of a working from home tax.

Federation of Small Businesses chairman (FSB) national chairman, Mike Cherry, told “In the middle of such a severe downturn, it’s remarkable to see proponents of new business taxes. Between business rates, corporation and dividend taxation, VAT, capital gains tax, fuel duty, congestion and clean air charges, insurance premium tax and employer national insurance contributions, firms already have enough to worry about.

“Many small firms have gone above and beyond to adhere to government guidance around working from home – investing in new ways of operating at a time when revenues are way down. Government should be focused on helping small business owners return to growth, not stifling their chances by arbitrarily penalising home working.

“With unemployment rising and GDP taking another dramatic hit this quarter, every single policy decision from here on in needs to be assessed according to its capacity to stimulate business creation, facilitate new jobs and protect livelihoods. This is no time for new taxes, or hikes to old ones, quite the opposite.”

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Anna Jordan

Anna is Senior Reporter, covering topics affecting SMEs such as grant funding, managing employees and the day-to-day running of a business.

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