Tax people who work from home 5% to support at-risk jobs, says investment bank

Tax could raise £6.9bn to support jobs at risk as society adjusts, say analysts

Researchers argue that people working at home have enjoyed gains that others have not (Getty/iStock)

People who work from home should pay a 5 per cent tax for the privilege, an investment bank has recommended.

Researchers at Deutsche Bank said the tax would raise £6.9bn in the UK and £36bn in the US which could be paid to people who cannot work from home. Under the plan, grants of up to £2,000 would be made available to low-income workers and those threatened with redundancy.

The researchers argue that people working at home have enjoyed gains which many workers have not benefited from. Not only are they at less risk during the pandemic, they also save money by spending less which reduces economic activity and the tax it generates. 

These changing habits cause problems for businesses, resulting in job losses which have primarily affected people who are unable to work from home.

That is likely to become a bigger issue if the pandemic changes people’s working arrangements in the long term. A tax on home working could incentivise people to go to the office and the revenue raised would help pay for problems cause as society adjusts, the analysts argued.

“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,” wrote Deutsche Bank strategist Luke Templeman.

“For years we have needed a tax on remote workers. Covid has just made it obvious.

“Quite simply, our economic system is not set up to cope with people who can disconnect themselves from face-to-face society.”

The report highlighted savings on travel, lunch, clothes and cleaning that home workers benefit from.

A 5 per cent tax on an salary of £35,000 a year equates to around £7 per day which Deutsche Bank suggested would be paid by the employer.

That money would be used only to support people who cannot work from home and who earn less that $30,000 (£22,700) a year.

More than three quarters of a million UK jobs have gone since the pandemic began with redundancies reaching a record level between July and September. Businesses reliant on commuter trade have been among the worst affected.

Transport companies have received government support while chains including Pret a Manger have cut thousands of staff.

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