A long-standing tax break that helps home workers cover household expenses will be scrapped from April 2026. This will affect an estimated 300,000 workers and generate tens of millions of dollars for the Treasury.
The relief – originally introduced more than a decade ago and widely used during the pandemic – allows workers who are required to work from home and do not receive reimbursement from their employer to claim either their actual additional costs or a standard rate of £6 a week without providing receipts.
From 6 April 2026 this entitlement will be abolished, removing a benefit of £62 per year for basic rate taxpayers and £124 per year for higher rate taxpayers. The Treasury says the decision is aimed at tackling widespread breaches, arguing that more than half of applications fail checks.
According to HMRC, claims rose sharply during and after the pandemic, with many employees continuing to be eligible for the allowance even if they were no longer officially 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 admits the change could put pressure on businesses to cover the expenses themselves – shifting the burden from HMRC onto businesses already struggling with tight margins.
The relief was first introduced in 2011-2012 as a £4 weekly grant and increased to £6 during the pandemic. At that time, eligibility requirements were relaxed, allowing millions of people forced to work remotely to claim without meeting the traditional requirement of a contractual obligation to work from home.
Budget documents show the Treasury is expected to raise £10m in 2026-27, rising to £30m in 2027-28 and stabilizing at £25m a year thereafter.
Officials insist the measure will have “no significant macroeconomic impact,” although it represents another additional cost increase for working households.
HMRC says the policy has “no direct impact” on employers as it targets individual taxpayers. But officials acknowledge that some companies may face increased expectations to provide tax-free refunds if relief is not provided.
The decision comes amid a wider tightening of tax breaks and deductions as the government seeks to close revenue gaps while claiming to protect “fairness” in the tax system.
