For many years, employees who were required to work from home have been able to claim tax relief on certain additional household costs that they had to cover themselves, where these expenses were not reimbursed by their employer. The relief was designed to recognise that some costs, such as higher heating and electricity bills or work-related telephone usage, were incurred solely because employment duties were being carried out from home.
That said, the rules surrounding the relief have always been fairly strict. Employees could not make a claim simply because they chose to work from home or found it more convenient. In order to qualify, homeworking generally needed to be a genuine requirement of the role rather than a personal preference.
During the pandemic, HMRC temporarily relaxed the rules for the 2020/21 and 2021/22 tax years in recognition of the unprecedented number of employees working remotely. Under these temporary measures, employees were able to claim tax relief if they worked from home because of government guidance or workplace closures, even where homeworking was not specifically required under the terms of their employment contract. As a result, eligibility for the relief widened considerably and claims increased sharply.
Once the temporary COVID-era measures came to an end, the original pre-pandemic rules automatically came back into force. Despite this, many employees continued making claims based on the more generous pandemic conditions. HMRC later carried out compliance checks and found that a significant proportion of claims did not satisfy the underlying statutory requirements. In response, HMRC chose not only to end the temporary concession, but also to remove employees’ ability to personally claim tax relief for additional household expenses where those costs have not been reimbursed by their employer.
Changes effective from 6 April 2026
From 6 April 2026, employees will no longer be able to claim tax relief directly from HMRC for additional household expenses that have not been reimbursed by their employer. This applies regardless of whether the employee works from home by choice or because it is required as part of their role.
The change means that even where an employment contract specifically requires homeworking, or where an employer does not provide suitable office space, employees will not be entitled to make their own claim for relief. Instead, any tax-efficient assistance with homeworking costs will need to be arranged and provided by the employer.
Employer-provided support
Although employees will no longer be able to make their own claims for homeworking tax relief, employers can still provide support in a number of tax-efficient ways for staff who work remotely.
Flat-rate homeworking allowance
Employers are still able to pay employees a flat-rate homeworking allowance of up to £6 per week, or £26 per month, without creating a liability to income tax or National Insurance contributions. Importantly, employees do not need to provide evidence of the actual costs they have incurred.
To qualify, two key conditions must be met:
- there must be an arrangement in place allowing the employee to work from home; and
- homeworking must take place regularly, creating an established working pattern, such as working from home one day each week.
In most cases, a written communication from the employer, such as an email confirming homeworking arrangements, should be enough to demonstrate that a valid homeworking agreement exists.
Provision of goods and services
Employers can also support remote workers by supplying equipment or services needed for employees to carry out their duties from home. This may include items such as laptops, office chairs, desks or other work-related equipment.
Unlike the flat-rate homeworking allowance, there is no requirement for the employee to work from home on a regular basis, nor does there need to be a formal homeworking agreement in place. The exemption from tax will generally apply provided that any personal use of the equipment is insignificant, a condition HMRC typically applies with a degree of flexibility.
There is no fixed monetary cap on the value of equipment that can be provided, although there must be a genuine business reason for the purchase. The employer must either provide the equipment directly and retain ownership, or from 6 April 2026 onwards reimburse costs where the employee has purchased the items on the employer’s behalf.
Reimbursement of actual costs
Employers may also reimburse employees for genuine additional household expenses incurred as a result of working from home. This can include costs such as increased utility bills or business-related telephone expenses. Where the expenses are wholly, exclusively and necessarily incurred in carrying out employment duties, the reimbursement can normally be made free from income tax and National Insurance contributions.
If payments exceed the employee’s actual additional costs, the excess amount is likely to be treated as taxable earnings. In practice, HMRC generally expects employers to retain clear evidence demonstrating that any reimbursements do not go beyond the extra household expenses genuinely incurred by the employee.
Broadband
Broadband costs can also be reimbursed by an employer without creating a tax charge in certain circumstances. Typically, this treatment only applies where the employee did not already have a broadband connection in place, is required to work from home and the internet service is mainly used for business purposes.
If these conditions are not satisfied, any reimbursement of broadband costs may be treated as a taxable benefit in kind.
What employers should consider
The main practical consequence of these changes is that any support for homeworking expenses will now need to be provided directly through employer arrangements, rather than through individual employee claims.
Employers should therefore review their current homeworking policies, employment contracts and staff handbooks to ensure they remain compliant with the updated rules and clearly set out the support available to employees who work from home.
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