Overview of the Change
Starting the 2026-2027 tax year (from 6 April 2026), UK tax law disallows deductions from earnings for additional household costs incurred by employees when required to work from home, if those costs are not reimbursed by the employer. This includes utility bills, business phone use, and other similar expenses. (gov.uk)
What Is Affected
- The flat rate relief of £6/week or actual billed amounts (with receipts) is no longer claimable. (gov.uk)
- The removal applies only to unreimbursed household expenses. If your employer reimburses you, then existing exemptions still apply. (gov.uk)
- Other expenses (e.g. travel costs, tools or equipment explicitly provided or arranged by the employer) remain subject to existing rules. (gov.uk)
Why This Changed
- HMRC found that over half of past claims were ineligible, reflecting widespread non-compliance with existing rules. (gov.uk)
- The aim is to simplify the system and remove ambiguities between what is employer’s responsibility vs what can be claimed in tax relief. (gov.uk)
What Employees Should Do Now
- Check your employer’s policies – an increasing number may begin offering reimbursed expense options in lieu of tax relief for unreimbursed homeworking costs.
- Retain receipts where they are reimbursed. If there’s a policy, make sure it clearly qualifies under HMRC’s rules to ensure the reimbursement avoids tax/National Insurance.
- Claim any historical reliefs for tax years where you were eligible but hadn’t claimed — you can still go back up to four past years. (gov.uk)
Example
Sarah, a basic-rate taxpayer, used to claim £6/week for her extra home working telephone and utility costs. From 6 April 2026 this is no longer allowable. But if her employer begins reimbursing her £24/month under the new benefit (provided it meets HMRC’s criteria), that reimbursement may now be tax-free for her and not give rise to Class 1 National Insurance. Without reimbursement, she will see a small net increase in tax owed but simplicity in filing.
This change shows HMRC stepping away from expense claims in areas with large ambiguity — best path forward for many will be through employer reimbursements or updated work-from-home policies.