What changed on 6 April 2026
The UK government has removed the Income Tax deduction for non-reimbursed homeworking expenses, which previously allowed employees to claim compensation for extra household utility costs, business-related phone calls, etc. The change is effective as of 6 April 2026. (gov.uk)
Who is affected?
- All employees working from home who have been paying additional utility or telephone or home expenses and were claiming them via Self Assessment or directly from HMRC.
- Excludes reimbursements made by employers. Employers can still reimburse such costs without deducting Income Tax or National Insurance, if arranged properly. (gov.uk)
- Those who have unpaid claims in prior years (going back 4 tax years) may still make late claims if eligible and not previously claimed. (gov.uk)
Why this matters: impacts on UK remote and hybrid workforce
- Increase in costs: Homeworking employees now bear full burden of utility, broadband, heating, lighting etc. Increased costs cannot be offset via tax return, unless employer reimburses.
- Shift in employer responsibility: Employers who wish to offer help must explicitly reimburse rather than rely on employee deductions.
- Financial effect: For someone working from home 5 days a week, utility bills (£ electricity, heating, etc.) could increase annual net costs by hundreds of pounds without relief.
Possible strategies and alternatives
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Negotiate employer reimbursement
- Encourage your employer to offer a fixed homeworking allowance or reimburse actual expenses.
- If employer provides equipment (desk, monitor, etc.), ensure this is structured as business-supplied equipment, which may be exempt from tax/NI when treated correctly.
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Document expenses
- If employer agrees to reimburse, keep good records and invoices to ensure compliance.
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Tax-efficient employer arrangements
- Employers could include homeworking allowances in salary package or as part of flexible benefits; proper design may make them tax-efficient.
Practical example
Sarah works from home three days per week. Until 6 April 2026 she was claiming £6/week fixed rate for homeworking expenses via her tax return. Post-change, this is no longer allowed. If her employer agrees to reimburse £30/month in additional utilities, that reimbursement—if set up officially—can avoid tax and NI deductions.
Summary & actionable takeaways
- Homeworking employees need to reassess their expenses: no more tax deduction for non-reimbursed homeworking costs from April 2026.
- Employers can step in: reimburse these costs to avoid undue financial burden.
- Claim old reliefs for previous years if eligible.
- Review your pay structure and expense benefits to see if rearrangements are possible for improved take-home pay.