Millions of individuals working remotely will lose the option to claim tax relief starting in April 2026. Currently, if your workplace lacks a designated office space for you, you can seek tax relief from HMRC for additional household expenses incurred while working from home, like energy or broadband costs. The work from home allowance in the UK is a fixed £6 per week, but you are ineligible for this relief if you voluntarily choose to work from home.

During the pandemic, the rules were more lenient, allowing anyone who worked remotely for even one day to claim tax relief. However, as of 2022, if your employer offers hybrid working and you opt to work from home part-time, you are not eligible for tax relief.

Chancellor Rachel Reeves announced in Budget 2025 that work from home tax relief would be discontinued for all workers from April. Nevertheless, employers can still provide financial assistance to cover remote work expenses without facing taxation. Additionally, the freeze on tax thresholds has been extended for an additional three years.

The freezing of tax brackets, known as fiscal drag, results in more individuals moving into higher tax brackets over time as their incomes increase. This practice is considered a stealth tax, allowing the government to collect more taxes without raising tax rates. The Office for Budget Responsibility predicts that by 2029/30, there will be an increase in basic-rate, higher-rate, and additional-rate taxpayers due to the freeze in tax thresholds.

The personal allowance determines the income threshold before tax obligations kick in. Earnings above this threshold are subject to the basic 20% income tax rate, with higher rates applying to higher income levels. National Insurance contributions start at £12,570, with an 8% rate on earnings at that level and a 2% rate on income above £50,270.