Millions of individuals compelled to work remotely will lose the option to claim tax relief starting April 2026. Currently, HMRC allows individuals to seek tax relief for additional household expenses related to remote work, like energy or internet costs, if their workplace lacks a designated office space. The UK’s work from home allowance stands at a flat rate of £6 per week, but it doesn’t apply if employees voluntarily choose to work from home.
During the pandemic, individuals working remotely for even a day were eligible for tax relief, but the rules changed in 2022. Workers cannot claim tax relief if they opt 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 would be discontinued for all workers from April. However, employers can still provide untaxed funds for remote work expenses. Additionally, the freeze on tax thresholds will be extended for another three years, with the income tax personal allowance frozen 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 income rises. This method, considered a stealth tax, enables the government to increase tax revenue without directly raising tax rates. The Office for Budget Responsibility estimates that the freeze in tax thresholds will lead to more individuals falling into higher tax brackets in the upcoming years.
The personal allowance determines the income threshold before tax obligations begin. Income above this threshold incurs a 20% basic rate of income tax, with higher rates applying for earnings exceeding £50,270 and £125,140. The National Insurance payment threshold is also set at £12,570, with an 8% contribution for earnings at this level and 2% for income surpassing £50,270.