Employees’ Working From Home Expenses

The government has confirmed a significant change to the tax treatment of employees’ working from home expenses. From 6 April 2026, employees will no longer be able to claim a tax deduction from their earnings for costs incurred while working from home.

This change, announced as part of the government’s wider review of workplace tax reliefs, will affect many employees who currently benefit from home-working expense claims.

Current Position

Under the existing rules, some employees who work from home are able to claim:

• A flat-rate deduction of £6 per week, or

• The actual additional costs of working from home, where these are higher and can be evidenced
  

These claims have typically covered costs such as increased heating, electricity or internet usage.

What Is Changing From April 2026?

From 6 April 2026, this tax relief will be abolished for employees.

The government has stated that the relief is being withdrawn because a large number of claims have been made by employees who are not entitled to them, particularly where home working is a personal choice rather than a contractual requirement.

As a result, employees will no longer be able to reduce their taxable earnings by claiming home-working expenses through Self Assessment or a PAYE tax code adjustment.

Employer Reimbursement – What Will Still Be Allowed?

Although employees will no longer be able to claim a personal tax deduction, employers will still be able to reimburse home-working expenses tax-free, provided strict conditions are met.

To qualify for reimbursement free of PAYE tax and National Insurance contributions, the expenses must be:

• Wholly, exclusively and necessarily incurred in the performance of the employee’s duties
  

This is a high threshold and, in practice, usually means that:

• The employee’s contract requires them to work from home, and

• The expenses arise directly because of that requirement
  

Employees who choose to work from home, or who do so under hybrid or flexible working arrangements, will not qualify for tax-free reimbursement under these rules.

What Does This Mean in Practice?

For employees, this change may result in a higher tax bill from April 2026 if they currently claim home-working relief.

For employers, it is an opportunity to:

• Review employment contracts

• Reassess expense reimbursement policies

• Ensure any payments made are compliant with HMRC rules
  

Clear documentation and consistency will be essential to avoid unexpected tax and National Insurance liabilities.

How We Can Help

At SJC, Chartered Accountants, we can advise both employers and employees on the impact of these changes, including:

• Whether home-working expenses can still be reimbursed tax-efficiently

• Reviewing contracts and expense policies

• Planning ahead for the removal of employee tax relief from April 2026
  

If you would like advice tailored to your circumstances, please contact our team.