Starting April 2026, millions of individuals working remotely will lose the option to claim tax relief. The current scheme allows for reimbursement of additional household expenses like energy or broadband if one’s workplace lacks a designated office space.
In the UK, the work from home allowance stands at a fixed rate of £6 per week. Notably, individuals who voluntarily opt to work from home are not eligible for this tax relief. During the pandemic, all remote workers, even for a single day, qualified for tax relief, but this changed in 2022 for those opting for hybrid working setups.
Chancellor Rachel Reeves announced in Budget 2025 the discontinuation of work from home tax relief for all workers starting this April. However, employers can still provide tax-free financial support for remote work expenses. Additionally, the freeze on tax thresholds will be extended for another three years.
The freezing of tax brackets, known as fiscal drag, gradually pushes more individuals into higher tax brackets as their incomes increase. This mechanism acts as a stealth tax, allowing the government to generate more revenue without directly raising tax rates. The Office for Budget Responsibility estimates that by 2029/30, the freeze will lead to an increase in basic-rate, higher-rate, and additional-rate taxpayers.
The personal allowance, set at £12,570, denotes the threshold before income tax applies. Above this amount, individuals are taxed at the basic 20% rate, with higher rates for earnings exceeding £50,270 and £125,140. National Insurance contributions start at £12,570, with rates of 8% on initial earnings and 2% on incomes surpassing £50,270.
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