Millions of individuals compelled to work remotely will lose the option to claim tax relief from April 2026. Currently, HMRC allows individuals to seek tax relief for additional household expenses related to remote work, such as utilities and internet, if their workplace lacks a designated office space. The work from home allowance in the UK stands at a fixed rate of £6 per week, but individuals are ineligible for this relief if they voluntarily choose to work from home.
During the pandemic, anyone working remotely for even a single day qualified for tax relief, but the rules changed in 2022. Now, individuals cannot claim tax relief if they opt to work from home part-time due to hybrid work 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 starting this April. However, employers can still provide financial assistance to employees for remote work expenses without incurring taxation. Additionally, the freeze on tax thresholds will be extended for another three years, affecting the income tax personal allowance, which was set at £12,570. This freeze, known as fiscal drag, gradually moves more individuals into higher tax brackets as their incomes rise, effectively increasing tax revenue without raising tax rates. The Office for Budget Responsibility estimates that by 2029/30, the freeze on tax thresholds will lead to an additional 780,000 basic-rate, 920,000 higher-rate, and 4,000 additional-rate income tax payers.
The personal allowance signifies the threshold at which most individuals begin paying taxes, with a basic rate of 20% applying to earnings above this threshold. Higher rates of 40% and 45% apply to incomes exceeding £50,270 and £125,140, respectively. Similarly, the National Insurance threshold is set at £12,570, with an 8% contribution rate on earnings above this amount, and a 2% rate on income surpassing £50,270.