What are the upcoming changes?
- Expanded reliefs for certain employer-provided benefits: reimbursements or provision of eye tests, home working equipment, and flu vaccinations will be exempt from Income Tax and National Insurance as legislation takes effect 6 April 2026. (gov.uk)
- Removal of Income Tax relief for non-reimbursed home-working expenses. From the same date, those expenses can no longer be claimed unless reimbursed by the employer. (gov.uk)
Why these changes?
- Part of the government’s Budget 2025 reforms aiming to simplify benefits-in-kind rules and reduce complexity. (gov.uk)
- The expansion of reliefs reflects post-pandemic adjustments: recognising ongoing home work and related costs. Conversely, removing individual expense claims aims to reduce administration and potential abuse. (gov.uk)
Who is impacted?
- Employees who incur costs working from home without reimbursement – they will no longer get tax relief for home-working expenses.
- Employers who offer benefits: those who provide equipment, supplies, or pay for eye tests/vaccinations will need systems to manage reimbursements or direct provision.
- Payroll administrators and benefit planners: ensure payroll software and policies adapt for new exemptions and expense claim removals.
What to do now
- Audit current policies, particularly for remote working expense arrangements. Identify non-reimbursed expenses that employees currently claim.
- Communicate with staff: let employees know what counts as a qualifying benefit and what does not from April 2026. Transparency reduces surprise for the upcoming tax year.
- Adjust payroll systems: ensure benefits-in-kind software or processes capture the expanded reliefs correctly, and disallow unreimbursed expense claims after the change date.
- Employer reimbursement strategy: for employees who incur home working expenses, consider offering reimbursement programs rather than relying on self-claims.
Example scenario
Sarah works from home for two days a week and previously claimed non-reimbursed home working expenses (electricity, broadband, etc). From 6 April 2026, those claims will be disallowed unless her employer reimburses them. Meanwhile, her employer now offers to fund an ergonomic chair and a laptop; those will be exempt under new reliefs.
In conclusion, these rule changes streamline employee benefits and expense relief, favouring employer-led reimbursement models. Planning ahead ensures both employers and employees avoid unexpected tax charges and leverage the expanded exemption where eligible.