Millions of individuals required to work remotely will lose the option to claim tax relief starting April 2026. Presently, individuals can seek tax relief from HMRC for additional household expenses linked to remote work, like energy or broadband, if their workplace lacks a designated office space. In the UK, the standard work-from-home allowance is £6 per week, but individuals opting to work from home do not qualify for this tax relief.
During the pandemic, those who worked remotely for even a day were eligible for tax relief, but the rules changed in 2022. Employees who choose to work from home part-time due to hybrid working options provided by their employers cannot claim tax relief. Chancellor Rachel Reeves announced in Budget 2025 the discontinuation of work-from-home tax relief for all workers starting this April.
Despite this change, employers can still provide financial assistance to cover remote work costs without incurring taxes. Furthermore, the freeze on tax thresholds will be extended for an additional three years. The freezing of tax brackets, known as fiscal drag, gradually pushes individuals into higher tax brackets as their income rises. This strategy, also termed a stealth tax, allows the government to collect more taxes without officially increasing tax rates.
The Office for Budget Responsibility forecasts that the freeze in tax thresholds will lead to a rise in basic-rate, higher-rate, and additional-rate taxpayers in the coming years. The personal allowance, the threshold before income tax is applied, stands at £12,570. Income above this amount is taxed at the basic 20% rate, with higher rates applied for earnings exceeding £50,270 and £125,140. The National Insurance payment threshold is also set at £12,570, with contributions starting at 8% for income at this level and 2% for amounts above £50,270.