What Changed
Starting 6 April 2026, employees can no longer claim Income Tax deductions for additional household expenses incurred when working from home that have not been reimbursed by their employer. (gov.uk) These expenses included things such as increased utility bills, telephone costs, or other household costs previously claimable under section 336 of ITEPA 2003. (gov.uk)
However, if employers reimburse eligible homeworking costs (under section 316A ITEPA), those payments can still be tax-free and do not incur Income Tax or National Insurance. (gov.uk)
Who is Affected
- Employees who work from home and were relying on relief for household running costs that are not reimbursed by the employer. (gov.uk)
- Employers who used to allow non-reimbursed expense claims may see an internal shift as employees push for reimbursement arrangements.
- Anyone filing a P87 form (expense claims by post/phone) for working-from-home costs in tax year 6 April 2026–5 April 2027 or later will find that relief is no longer available. Past years’ claims (up to 4 prior tax years) are still allowed. (gov.uk)
Practical Implications and Examples
| Scenario | Post-6 April 2026 | Before 6 April 2026 |
|---|---|---|
| An employee working from home using extra electricity and heating | Cannot claim deduction unless employer reimburses costs | Could claim via ITEPA relief or fixed rate £6/week if eligible without receipts (gov.uk) |
| Employer reimburses electricity bill receipts | Reimbursement is tax-free under section 316A | Also allowed previously, so no change |
| Employee tries to claim via P87 for homeworking after April 2026 | Not permitted | Permitted for some under prior scheme |
What You Should Do Next
- Review your employment contract & policies: Check if your employer has a written policy for reimbursing homeworking costs. Employees should negotiate or request reimbursement where possible.
- Keep receipts and records: If employer reimburses, ensure you provide proper evidence; the employer should retain substantiation.
- Update your tax affairs: If you used the fixed rate or claimed via expenses, adjust your expectations—this relief is gone unless employer reimburses.
- Plan ahead for future costs: Budget for utilities and household running costs now that you may no longer recover them.
- Consult a tax professional: If you have mixed income (self-employment + employment), or unique home working conditions, advice can help prevent unintended tax liability.
Summary
Removing non-reimbursed homeworking expense relief from 6 April 2026 means employees need either employer reimbursement or cannot claim household cost deductions. This is a relatively modest policy in terms of fiscal impact but significantly alters the cost structure for many home workers. Understanding this change ensures you're not caught off guard come self-assessment season.
Stay proactive: determine where your homeworking expenses stand, and whether your employer can offer reimbursement to preserve tax efficiency.