Employee income tax relief for working from home expenses to be scrapped

From 6 April 2026, employees will no longer be able to claim tax relief for their additional household costs incurred while they are working from home.

Background to employees claiming tax relief for working from home

Employees who are required, under their contract of employment, to work from home are currently able to claim income tax relief for the extra costs they incur by working from home. This has been the position for many years under current tax law.

The costs include the extra gas and electricity used for light, heat and power to the room where they work from. Costs could also include a dedicated business paid telephone line to home and possibly internet to home if not previously required or installed by the employee. An employee is not able to claim apportionment of fixed costs e.g. part of their rent, council tax and mortgage etc.

Calculation of the extra costs does not need to be 100%. However, any basis for determining the extra costs must be on a fair.  More recently, where an employee works from home full-time, they have been able to claim a flat rate of £6 per week rather than by making detailed calculations.

The £6 is not a tax-free allowance that all employees can claim for when they sometimes work from home. Instead, the £6 per week is a recordkeeping easement so that detailed utility invoices and additional cost calculation are not required to demonstrate the amount of the extra costs incurred.

Employees who choose to work from home, when their employer provides an office or similar facilities to work from, are not permitted to claim for the incremental costs of working from home.

Similarly, hybrid workers who have a choice as to whether they work from home on a number of days each week are not able claim their extra cost.  Only employees who are contractually required to work from home can currently claim.

Why the change by HMRC?

During the Covid-19 pandemic lockdowns through 2020/21 and 2021/22, many employees were instructed to work from home. HMRC recognised that employees where incurring extra costs by working from home. In response, employees were able to claim income tax relief on £6 per week.

HMRC say that they have discovered that over half of employees who have made tax claims for working from home expenses were not actually eligible to claim tax relief. Moreover, some sectors have either completely closed their offices or significantly reduced the number of working spaces in their offices.

Some of the incorrect tax relief has been given by default by H M Revenue & Customs e.g. where previous tax claims of £6 per week have not been removed from employee’s current PAYE tax codes.

What is changing?

Due to the high number of incorrect tax claims, HMRC have decided to stop employees claiming tax relief from 6 April 20265.  The tax law in this area will be updated. It appears totally unfair for those employees who are required by their duties or their employer to work from home.

It has always been difficult for employees to claim tax relief for their employment related expenses. The tax rules specify that if an employee is to claim tax relief on their expenses that such amounts must have been incur wholly, exclusively and necessarily in the performance of their employment. It is the ‘necessarily’ part of this rule that makes it so hard for employees to claim. An employee who choses to work from home is not necessarily required to work from home.

A basic rate, 20%, taxpayer who is currently claiming £6 per week will be £62 worse off, while a higher rate 40% taxpayer will be £125 worst off from 6 April 2026.

What is staying the same?

Employers may still choose to pay employees, who work from home, for their additional household expenses. IN this case, the employer may claim tax relief for their costs and employees will not be taxed on £6 per week, to cover reasonable amounts paid to them to cover their working from home expenses.

You can read more on the above by reviewing the HMRC policy paper written after the Budget of 2025 on Removal of tax relief on non-reimbursed homeworking expenses.