Millions of individuals who have transitioned to remote work will lose the option to claim tax relief starting in April 2026.
Currently, if your workplace does not provide a designated office space, you can seek tax relief from HMRC for additional household expenses related to working from home, such as energy or internet costs.
In the UK, the work from home allowance is a fixed rate of £6 per week. However, you are ineligible for this tax relief if you voluntarily choose to work from home.
During the pandemic, individuals who worked remotely, even for just one day, were eligible for tax relief, but the rules changed in 2022. Now, if your employer offers hybrid working and you choose to work from home part-time, you cannot claim tax relief.
Chancellor Rachel Reeves announced in the 2025 Budget that the work from home tax relief will be discontinued for all workers from April. Nonetheless, employers can still provide financial assistance to employees for home working expenses without facing taxation.
Additionally, the freeze on tax thresholds will be extended for three more years. The income tax personal allowance, currently set at £12,570, was initially planned to be frozen until April 2028 but will now remain unchanged until the end of the 2030/31 financial year.
This freezing of tax brackets, termed fiscal drag, leads to more individuals falling into higher tax brackets as their incomes rise. It is considered a stealth tax as it enables the government to collect more taxes without increasing tax rates.
The Office for Budget Responsibility estimates that the freeze in tax thresholds will result in a significant increase in the number of basic-rate, higher-rate, and additional-rate income tax payers by 2029/30.
The personal allowance determines the income level at which tax payment begins. Income above this threshold incurs the basic 20% income tax rate, with higher rates applying for earnings above £50,270 and £125,140.
The National Insurance payment threshold is also set at £12,570, with an 8% contribution rate for income above this threshold and a 2% rate for earnings surpassing £50,270.