A long-standing tax relief that helps home-based workers cover household expenses will be scrapped from April 2026, in a move that will affect an estimated 300,000 employees and raise tens of millions for the Treasury.
The relief — originally introduced more than a decade ago and widely used during the pandemic — allows employees who are required to work from home and receive no reimbursement from their employer to claim either their actual additional costs or a standard rate of £6 per week without providing receipts.
From 6 April 2026, this entitlement will be abolished, removing a benefit worth £62 a year for basic-rate taxpayers and £124 a year for higher-rate taxpayers. The Treasury says the decision is aimed at tackling widespread non-compliance, arguing that more than half of claims fail verification checks.
HMRC said claims surged during and after the pandemic, with many employees continuing to claim the allowance even when no longer formally required to work from home. Ministers argue the move is about restoring “fairness” to the system.
While employers will still be allowed to reimburse home-working costs tax-free, the government acknowledges that the change may create pressure on businesses to cover expenses themselves — effectively shifting the burden from HMRC onto firms already facing tight margins.
The relief was first introduced in 2011–12 as a £4-per-week allowance, increased to £6 during the pandemic. At that time, eligibility rules were loosened so millions forced to work remotely could claim without meeting the traditional requirement of being contractually obliged to work from home.
Budget documents show the Treasury expects to raise £10 million in 2026–27, rising to £30 million in 2027–28, and stabilising at £25 million per year thereafter.
Civil servants insist the measure will have “no significant macroeconomic impact”, though it represents yet another incremental cost rise for working households.
HMRC says the policy has “no direct impact” on employers because it targets individual taxpayers, but officials concede some businesses may face increased expectations to provide tax-free reimbursements in the absence of the relief.
The decision comes amid a broader tightening of tax reliefs and deductions as the government seeks to close revenue gaps while claiming to protect “fairness” in the tax system.
