Millions of individuals compelled to work remotely will lose the opportunity to claim tax relief from April 2026. Under current regulations, workers can seek tax relief from HMRC for additional household expenses incurred while working remotely, such as energy and broadband costs, 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 opting to work from home do not qualify for this tax relief.
During the COVID-19 pandemic, tax relief was available to anyone working remotely, even for a single day. However, in 2022, changes were made to prevent individuals from claiming tax relief if they chose to work from home part-time due to hybrid working arrangements offered by their employers.
Chancellor Rachel Reeves announced in Budget 2025 that work from home tax relief will be discontinued for all workers starting this April. Nevertheless, employers can still provide financial assistance to cover remote working expenses without facing taxation. Furthermore, the freeze on tax thresholds will be extended for an additional three years, impacting the income tax personal allowance, which will remain at £12,570 until the end of the 2030/31 financial year.
The freezing of tax brackets, known as fiscal drag, gradually pushes more individuals into higher tax brackets as their incomes rise. This strategy, often referred to as a stealth tax, allows the government to increase tax revenue without officially raising tax rates. The Office for Budget Responsibility estimates that the freeze on tax thresholds will lead to an increase in the number of basic-rate, higher-rate, and additional-rate taxpayers in the coming years.
The personal allowance determines the income level at which individuals start paying taxes. Earnings above this threshold are subject to the basic 20% income tax rate, while higher rates apply to higher income levels. The National Insurance payment threshold is also set at £12,570, with a rate of 8% on earnings above this amount, and 2% on incomes exceeding £50,270.