Working from home tax relief to be abolished

From April 2026, employees will no longer be able to claim a deduction from income tax from HMRC for extra household costs incurred due to being required to work from home. Previously, these claims could cover increased utility bills and business related telephone calls, either based on actual costs (with supporting evidence) or at a fixed rate of £6 per week without receipts. 

What this means for employers

This measure will not impact the existing ability for employers that reimburse employees for costs relating to homeworking where eligible without deducting Income Tax and National Insurance contributions.

Employers will need to assess the impact and determine if policy adjustments are necessary. Employers should:

• assess the impact and determine if internal policy adjustments are necessary  to reflect the upcoming changes
• clearly inform contractual home working employees about the abolition of the work-from-home tax relief and its implications
• evaluate whether to provide reimbursement for eligible home-working expenses if this is not something you already provide
• check that payroll procedures are updated and compliant with the new tax rules.

More information can be found on gov.uk website.