Working From Home Tax Relief 2026: What Finance Teams Need to Know

From 6 April 2026, employees will no longer be able to claim working from home tax relief themselves. The government is removing the ability to claim relief on unreimbursed homeworking expenses, shifting responsibility away from individuals and towards employers. 

For most individual employees, the amounts involved might feel modest. But across a team, the impact adds up. And as the person responsible for keeping your organisation’s finances and people policies in order, this is one of those changes where getting ahead of it really matters. 

In practice, this shifts homeworking costs from an individual tax matter into an employer-controlled expense process. 

Here’s everything you need to know. 

What is the working from home tax relief? 

The working from home tax relief is a relief available through His Majesty’s Revenue and Customs (HMRC) that allows employees to claim a tax deduction on additional household costs they incur while working from home. This isn’t about office rent or company equipment—it covers things like increased electricity bills, higher heating costs, and business-related phone calls that employees personally fund. 

The relief has been available in two forms: 

• Flat rate: Employees could claim £6 per week (around £312 per year) without needing to keep receipts or provide detailed evidence. 
• Actual costs: Employees with higher genuine costs could claim the real amount, provided they could evidence it properly. 

The flat-rate route became particularly popular during and after the pandemic, when homeworking became widespread. It was simple, accessible, and required minimal administration—which is partly why its removal is attracting attention. 

Why is it being changed? 

The government’s stated reason for the change is non-compliance. HMRC reviewed a significant number of claims and found that over half were ineligible—either because employees did not meet the qualifying criteria (for example, they chose to work from home rather than being required to) or because the claim was submitted incorrectly. 

In response, the government has decided to remove the ability for employees to claim relief on unreimbursed homeworking expenses altogether. From 6 April 2026, responsibility effectively shifts away from individual claims and towards employer-managed reimbursement, where applicable. 

Key dates and who’s affected 

Here’s a timeline of all the changes you need to know and when they come into effect: 

Date	What happens
Up to 5 April	Employees can still claim working from home tax relief for eligible costs
6 April 2026	Abolition takes effect, meaning individual employee claims are no longer permitted
2025/26 tax year	Last year employees can submit a valid claim (deadline: 31 January 2027 via Self Assessment, or via PAYE claim before year end)
From 2026/27 onwards	No individual relief available, employer reimbursement becomes the primary route for relief

Who’s most affected? 

Around 300,000 workers are expected to be affected by this change. For individuals, this effectively results in a tax increase of around £62 per year for basic-rate taxpayers and £124 for higher-rate taxpayers. 

Those who will feel this most are: 

• Employees who are required to work from home as part of their role (and were legitimately claiming) 
• Higher earners who were claiming at the 40% rate 
• Basic-rate taxpayers who have been relying on the flat-rate allowance 

Those figures might not sound significant on their own, but when you factor in rising energy costs, higher national insurance contributions from April 2025, and the broader squeeze on take-home pay, employees are likely to notice. 

What this means for finance teams 

The reality is that while the individual relief is going, the underlying costs for employees aren’t. People working from home fll-time are still paying more for energy, broadband, and phone use. The question now is whether those costs remain with the employee, or whether you choose to step in. 

Employers can still reimburse genuine, work-related homeworking expenses without creating a tax liability, provided payments are reasonable, properly evidenced, and meet HMRC’s criteria. In practice, this shifts responsibility away from individual tax claims and towards employer-managed expense processes. 

This creates an opportunity to maintain goodwill with remote workers, stay compliant, and support homeworking in a structured way—but only if the right reimbursement approach is in place. 

Common pitfalls to watch out for 

This change may not have a significant impact per employee, so it’s an easy one to miss. Here are the most common mistakes to avoid: 

• Assuming employees already know: Most people won’t have spotted this change, so you need to communicate proactively with any affected members of you team. 
• Conflating employer reimbursement with the old relief: These are different things. And that’s why a clear internal policy needs to distinguish between the two. 
• Reimbursing without a process: Ad-hoc reimbursements without receipts, approval workflows, or proper records create compliance risk. HMRC’s record keeping requirements are clear; the burden sits with the employer. 
• Forgetting hybrid workers: If someone works three days at home and two in the office, do you reimburse proportionally? You’ll need a consistent answer. 
• Overlooking the payroll connection: Any reimbursements need to flow through the right channels—ideally synced with payroll to avoid manual reconciliation further down the line. 

What to do next: a practical guide for finance teams 

Step 1: Audit your current position 

Find out how many of your employees are currently claiming working from home tax relief individually, and what their expectation is going forward. This might involve a quick survey or a conversation with your HR team. 

Step 2: Decide on your employer reimbursement approach 

You don’t have to reimburse employees for home working costs—but if you choose to, you’ll need to decide: 

• What costs are covered (e.g. utilities, broadband, phone)? 
• What rate or method you’ll use (flat rate per home-working day, or actual evidenced costs)? 
• What the approval process looks like? 
• How you’ll handle hybrid workers vs. full-time remote workers? 

The HMRC guidance on homeworking expenses sets out the tax-free limits and conditions, so it’s a good starting point. 

Step 3: Update your expense policy 

If you’re introducing or expanding employer reimbursements for home working costs, your expense policy needs to reflect that. Be specific about what is and isn’t included; vague policies lead to inconsistent claims, disputes, and compliance gaps. 

Step 4: Put a proper process in place 

Manual expense management—spreadsheets, paper receipts, email approvals—simply isn’t going to cut it for this. If employees are submitting home working expense claims, you need a system that captures the right information, routes it for approval, and keeps a full audit trail. That’s exactly what expense management software is designed to do. 

Step 5: Communicate clearly with employees 

Once your policy is set, communicate it before April 2026. Employees should know: 

• That the individual tax relief is ending, 
• Whether the company will reimburse home working costs, and how, 
• How to submit a claim if applicable, 
• And, what’s not covered. 

Step 6: Review your payroll integration 

Reimbursements that run through payroll need to be properly coded and processed. Make sure your finance and payroll teams are aligned and that any new expense flows are accounted for in your payroll process. If you’re using Cintra payroll software alongside Capture Expense, the integration between the two makes this considerably more straightforward. 

Take control of your expense process 

The working from home tax relief changes are a good prompt to step back and look at how your organisation manages employee expenses more broadly. If you’re still relying on manual processes, now’s the time to fix that. 

Capture Expense gives finance teams a clear, automated way to manage expense claims—from submission and approval through to reimbursement and reporting. Everything’s tracked, everything’s evidenced, and the audit trail is there if you ever need it. 

If you’d like to see how it works in practice, book a demo or take a look at the product tour at your own pace!