UK Home Working Tax Relief Ends in April 2026: 300,000 Workers to Lose HMRC Allowance. Reeves’ amendment to HMRC rules implies that 300,000 people in the UK will lose their tax allowance starting on Monday, April 6, 2026.
Starting this Monday, April 6, almost 300,000 people in the UK who work from home will lose their yearly home working allowance. Azets, an accounting and business consulting firm, found that HMRC thinks that getting rid of this rule for homeworkers will save £115 million over five years starting in April 2026.
Clair Williams, head of employment tax at Azets, warned that taking away the tax break for homeworking expenses that aren’t repaid might be a big financial shock for many people.
She stated, “This tax break has been around for a long time and helps about 300,000 people who have to pay extra household costs like heating, electricity, and business phone calls while they are working.” Claimants can get tax breaks on up to £6 a week right now, and they don’t have to show receipts to HMRC.If this tax break is taken away, people who pay the basic rate will have to pay £62 more in taxes, while people who pay the higher rate will have to pay £124 more. However, firms can still pay these costs back to employees who are eligible without taking away income tax or National Insurance contributions.
In 2020 and 2021, the rules for who might get homeworking fees were changed to include employees who had to work from home because of the epidemic, not just because of their job requirements.
Clair added, “The government is moving the cost responsibility to the private sector because they are worried about non-compliance, which is a fancy way of saying fake claims. This year’s business tax burden is already the highest it has been in 28 years, at 32 percent.”It’s also important to remember that local businesses may feel pushed to adjust their reimbursement policies to provide WFH employees peace of mind, and some employees don’t have a place to go to work because their company doesn’t have a physical location. According to HMRC’s own numbers, getting rid of the measure will save the Treasury £115 million over five years from when it was first introduced.
Chancellor Rachel Reeves announced the end of the tax relief in last year’s Autumn Budget. “With so many policy announcements made then, this one perhaps fell through the cracks of general awareness,” Clair said. “The estimated 300,000 people currently claiming for the tax relief can do so for tax year 2025-2026 and retrospectively for up to four previous tax years, but this will no longer be possible for the new tax year starting this April.” April 5, 2026, is the last day to ask for tax relief for the 2021–22 tax year.
Clair warned that some workers might accidentally end up in a higher tax bracket because tax bands are still frozen. This is called “fiscal drag.”
She then said, “The end of home working tax relief is good news for the country’s finances, but it could mean more work for businesses and less money for WFH employees.”