Millions of individuals compelled to work remotely will lose the option to claim tax relief starting April 2026. Presently, HMRC allows individuals to seek tax relief for additional household expenses related to remote work, such as energy and broadband, if their workplace lacks a designated office. The standard work from home allowance in the UK stands at £6 per week, but individuals opting to work from home do not qualify for this relief.
During the pandemic, those working remotely for even one day were eligible for tax relief, but the rules changed in 2022. If employees choose to work from home due to hybrid working arrangements, they are not eligible for tax relief. Chancellor Rachel Reeves announced in the 2025 Budget the discontinuation of work from home tax relief for all workers from April. However, employers can still provide tax-free assistance for remote work expenses.
Additionally, the freeze on tax thresholds has been extended for three more years, affecting the income tax personal allowance, which was slated to be frozen until April 2028 but now remains frozen until the end of the 2030/31 financial year. This freeze, termed fiscal drag, pulls more individuals into higher tax brackets as their incomes rise without adjusting the tax rates.
The Office for Budget Responsibility estimates that the freeze in tax thresholds will lead to an increase in the number of basic-rate, higher-rate, and additional-rate taxpayers in the coming years. The personal allowance determines the income level at which taxes begin, with the basic rate at 20%, the higher rate at 40%, and the additional rate at 45%. National Insurance contributions commence at the same threshold as the personal allowance, with rates of 8% and 2% for different income levels.