Home workers in the UK face a direct hit to their finances from 6 April 2026 when the government removes the income tax relief for additional household costs incurred by employees required to work from home. According to the government publication, the change ends the ability to claim a deduction from Income Tax either at the flat rate of £6 per week or for actual additional costs with evidence.

Chancellor Rachel Reeves announced the abolition as part of the November Budget, a move the Treasury says will contribute to deficit reduction. Industry reporting notes the decision was flagged in the Budget documents and is included in the Finance Bill 2025-26.

Government estimates suggest roughly 300,000 employees will be affected, primarily those who are required to work from home and who do not receive reimbursements from their employers. Analysis from independent advisers calculates the typical effect will be modest for most individuals: basic-rate taxpayers face an annual increase of about £62 while higher-rate taxpayers could see around £124 extra tax.

While the relief for individuals is being removed, official guidance and employer-focused bodies stress that employers retain the option to reimburse employees for homeworking costs tax-free. NHS Employers and tax advisers note there is no legal obligation on firms to make such payments, so any protection for affected staff will depend on employer policy.

MoneyWeek and other commentators have estimated the policy will yield fiscal savings, projecting around £100 million by 2030/31, and the move sits alongside broader Budget measures that keep income tax thresholds frozen, a change described as fiscal drag that will push more people into higher tax bands. Government projections accompanying the Budget imply substantial knock-on effects on who pays tax and at what rate.

Tax specialists recommend employers review their homeworking reimbursement policies ahead of the change to avoid creating unexpected costs for staff. Bloomsbury Professional and other advisory sources urge payroll and HR teams to consider whether to offer tax-free reimbursements or expand other support to mitigate the removal of the individual deduction.

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