HMRC to scrap homeworking tax relief from 2026, hitting 300,000 employees

"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."

"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."

A tax relief that allowed employees required to work from home and receive no employer reimbursement to claim additional household costs or a standard £6 per week will be abolished from 6 April 2026. The change will affect an estimated 300,000 employees and removes a benefit worth £62 a year for basic-rate taxpayers and £124 a year for higher-rate taxpayers. The Treasury cites widespread non-compliance, saying more than half of claims fail verification checks after a surge in claims during and after the pandemic. Employers can continue to reimburse home-working costs tax-free, but the change may push expense obligations onto firms. Budget forecasts expect revenue gains of £10m in 2026-27, £30m in 2027-28 and a steady £25m thereafter.

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