Starting from April 2026, individuals working remotely will lose the option to claim tax relief. Currently, if your workplace lacks a designated office space, you can request tax relief from HMRC for additional home working expenses like energy and broadband. The UK’s work from home allowance is a fixed £6 per week, except if you voluntarily choose to work from home.
During the pandemic, tax relief was available to anyone working from home even for a single day. However, recent changes prevent individuals from claiming tax relief if they opt for hybrid working due to employer policies.
Chancellor Rachel Reeves announced the discontinuation of work from home tax relief in the Budget 2025, effective this April. Nevertheless, employers can still assist employees with home working costs without facing taxation. Additionally, the freeze on tax thresholds has been extended for three more years, impacting the income tax personal allowance, which will now remain fixed 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 mechanism, often termed a stealth tax, enables the government to increase tax revenue without directly raising tax rates.
The Office for Budget Responsibility forecasts that the freeze in tax thresholds will lead to an increase in basic-rate, higher-rate, and additional-rate taxpaying individuals in the upcoming years. The personal allowance delineates the earnings threshold before tax liability kicks in, with the basic 20% rate applying thereafter. Higher earnings trigger the 40% and 45% tax rates at specific income levels.
Moreover, the National Insurance payment threshold is also set at £12,570, with an 8% contribution rate below this threshold and a 2% rate on earnings surpassing £50,270.