What’s changed from 6 April 2026
Legislation now prevents employees from claiming unreimbursed household expenses as tax deductions under section 336 ITEPA 2003. These expenses previously covered things like extra heating, lighting, and general household usage for working from home. Importantly, employer payments or reimbursed expenses under section 316A ITEPA remain valid and untaxed. Travel costs under section 337 are also still deductible. (gov.uk)
Who this affects
- Salaried employees and remote workers who pay additional home running costs but whose employer does not reimburse them.
- Digital nomads with UK payroll ties but international work arrangements, especially if employer-provided reimbursements are not aligned.
- Employers and payroll software vendors who will need to update policies and systems accordingly.
Why it matters
- These deductions were previously helpful in lowering taxable income for many working from home. Their removal increases tax liability for employees who used to claim.
- For cross-border workers or remote contractors based abroad but taxed in the UK, this adds complexity—what counts as employer reimbursement vs expense.
Actionable guidance and examples
| Scenario | Before 6 Apr 2026 | After 6 Apr 2026 | What you should do |
|---|---|---|---|
| Remote worker in a UK company with no reimbursement for extra heating usage | Claim extra heating under section 336 | Cannot claim this deduction | Ask employer to formalise a reimbursed expense arrangement or include home-working allowance under section 316A |
| A digital nomad seconded to UK employer, working abroad but commuting occasionally | Might have claimed household costs under UK tax guidance | No deduction for local household costs unless reimbursed by employer | Maintain clear employer agreements; track employer-paid allowances; consider foreign tax deductions in home jurisdiction also |
Practical steps
- Review employer expense policies to see if they provide reimbursed payments that qualify under section 316A.
- Update payroll software and internal accounting so that such deductions are no longer processed for unreimbursed expenses.
- Document employer payments clearly – maintain records showing which benefits or allowances are employer-paid.
- Seek professional advice if you're internationally mobile or dual-tax resident to ensure you're not unintentionally taxed unfairly.
Conclusion
The change removes a legacy deduction which many thought would stay. It sharpens the distinction between employer-paid allowances and employee deductions. For digital nomads especially, clarity and formal agreements with employers are now more important than ever.