“UK Ends Work from Home Tax Relief in 2026”

Millions of individuals compelled to work remotely will lose the ability to seek tax relief starting April 2026. Currently, you can claim tax relief from HMRC for additional household expenses related to remote work, such as utilities and internet, if your workplace lacks a designated office space. The UK’s work from home allowance stands at a fixed rate of £6 per week, but you are ineligible for this relief if you opt to work remotely. During the pandemic, individuals working from home even for a single day were eligible for tax relief, but the rules changed in 2022. Chancellor Rachel Reeves announced in the Budget 2025 that the work from home tax relief would be discontinued for all employees from April onwards. However, employers can still provide tax-free assistance to cover work from home expenses. Additionally, the freeze on tax thresholds will be extended for another three years, affecting the income tax personal allowance, which was originally set to be frozen until April 2028 but will now remain so until the end of the 2030/31 fiscal year. This tax bracket freeze, known as fiscal drag, gradually pushes more individuals into higher tax brackets as their incomes rise, serving as a stealth tax strategy to increase revenue without altering tax rates. The Office for Budget Responsibility estimates that the freeze in tax thresholds will lead to a significant increase in the number of income tax payers in various brackets by 2029/30. The personal allowance determines the income threshold before tax liability kicks in, with the basic 20% income tax rate applying once you surpass this threshold. Higher tax rates of 40% and 45% are levied on earnings exceeding £50,270 and £125,140, respectively. The National Insurance payment threshold is also set at £12,570, with an 8% contribution rate on earnings above this level, and 2% on incomes surpassing £50,270.