As part of the Autumn Budget 2025, the Government announced changes to the tax relief available for employees who are required to work from home.

Until 5 April 2026, employees could claim Income Tax relief for certain additional homeworking costs where those costs had not been reimbursed by their employer. Eligible costs included increased household utility costs (such as gas and electricity) and business telephone calls. Claims could be based on actual additional expenditure, supported by evidence, or a flat-rate allowance of £6 per week.

From 6 April 2026, employees will no longer be able to claim Income Tax relief directly from HMRC for eligible homeworking expenses that have not been reimbursed by their employer.

What is changing?

Tax relief for employees is being withdrawn

The final tax year for which employees can claim this relief is 2025/26. This means the claim can still be included on the Self Assessment tax return for the year ending 5 April 2026.

The relief will not be available for the 2026/27 tax year onwards.

Employer reimbursements remain unchanged

The change only affects employees claiming relief directly from HMRC on Self Assessment tax return.

Employers can continue to reimburse eligible homeworking expenses tax-free without deducting Income Tax or National Insurance contributions, provided the existing qualifying conditions are met. The current tax exemption for employer-paid homeworking expenses has not changed.

Claims for earlier tax years

Employees who were eligible but did not previously claim homeworking tax relief can still submit claims for the previous four tax years, subject to the normal time limits.

What it means for you

If you are an employee who works from home and currently claims tax relief directly from HMRC, you will no longer be able to make new claims for the 2026/27 tax year onwards.

If you are an employer, there is no change to the existing rules that allow you to reimburse qualifying homeworking expenses tax-free. If you have employees who are contractually required to work from home, you may wish to review your homeworking policy to ensure it continues to meet the needs of your business and your staff.

If you are a sole trader, these changes do not affect the way you claim business use of home expenses. Sole traders can continue to claim allowable business expenses (or use HMRC's simplified expenses where appropriate), provided the usual conditions are met.

For owner-managed businesses, directors who are employees of their own limited companies should note that this change removes the personal claim to HMRC but does not affect the company's ability to reimburse qualifying homeworking expenses under the existing tax rules, where the relevant conditions are satisfied.

If you are unsure how these changes affect you or your business, please get in touch. We will be happy to explain the tax implications and help you understand the options available.