Millions of individuals currently working remotely will lose the option to claim tax relief starting in April 2026. The UK government allows individuals to claim tax relief through HMRC for additional household expenses incurred while working from home, such as energy and broadband costs, if their workplace does not provide a designated office space. This tax relief is a fixed amount of £6 per week, and individuals are ineligible for it if they voluntarily choose to work from home.
During the pandemic, the rules were more lenient, allowing anyone who worked from home, even for a single day, to qualify for tax relief. However, as of 2022, individuals are no longer eligible for tax relief if they opt to work from home part-time due to hybrid working arrangements offered by their employers.
Chancellor Rachel Reeves announced in Budget 2025 that the work from home tax relief will be discontinued for all workers from April. Nevertheless, employers can still provide financial assistance to employees for home office expenses without incurring additional taxes. Additionally, the freeze on tax thresholds has been extended for three more years, affecting the income tax personal allowance, which will remain unchanged until the end of the 2030/31 financial year.
The freezing of tax brackets, known as fiscal drag, results in more individuals moving into higher tax brackets over time as their incomes increase. This approach, considered a stealth tax, enables the government to collect higher tax revenue without officially raising tax rates. The Office for Budget Responsibility estimates that the freeze in tax thresholds will lead to an increase in the number of basic-rate, higher-rate, and additional-rate income tax payers in the coming years.
The personal allowance denotes the income threshold before individuals are liable to pay income tax. Income above this threshold is subject to the basic 20% income tax rate, with higher rates applying to earnings exceeding £50,270 and £125,140. Additionally, the threshold for National Insurance payments begins at £12,570, with an 8% rate for earnings at this level and a 2% rate for income surpassing £50,270.