Working from home tax relief in 2026/27: what ended, and what employers can still pay

Two different things have been called the “working from home allowance”, and on 6 April 2026 they parted company. The relief an employee claimed from HMRC — £6 a week without receipts — has gone for 2026–27 onwards. The tax-free payment an employer can make for the same costs has not, and HMRC accepts it for hybrid workers too. This page sets out the new section of the Income Tax (Earnings and Pensions) Act, HMRC’s manual and GOV.UK, as read on 21 October 2026.

What changed on 6 April 2026

legislation.gov.uk records the provenance: “S. 360B inserted (for the tax year 2026-27 and subsequent tax years) by Finance Act 2026 (c. 11), s. 21”. GOV.UK’s employee guide now opens with it: “From the tax year 6 April 2026 to 5 April 2027, you will not be able to claim tax relief for working from home. You can still claim for the 4 previous tax years.” And HMRC’s manual: “From 6 April 2026 onwards, a deduction from earnings is no longer permitted for an employee's additional household expenses.”

The change was announced at Budget 2025, and HMRC’s impact note is unusually direct about why: “After checking claims, over half have been deemed to be ineligible for the relief, indicating high levels of non-compliance.” It also records how the flat rate came about — “HMRC allowed eligible employees to claim a flat rate of £4 a week from tax year 2011 to 2012, rising to £6 a week from tax year 2020 to 2021.” — and what removing it costs the people who used it: “This measure will impact an estimated 300,000 individuals by removing the tax relief on home working expenses which will result in a tax increase of £62 for basic rate taxpayers and £124 for higher rate taxpayers.”

Check the date on anything you readSome guides carrying “2026/27” in their titles still describe the employee claim as available. For 2026–27 onwards it is not, under the Act itself. The one route that survives is a payment from the employer.

What an employer can still pay tax-free

HMRC is explicit that the new rule does not touch this: “This change should not be confused with the exemption under section 316A ITEPA 2003, which continues to apply to certain homeworking payments made by employers.” and “The removal of deductions for household expenses therefore only applies to unreimbursed household expenses.” Its impact note says the same: “Employers can still reimburse employees for these costs where eligible without deducting Income Tax and National Insurance contributions.”

How much

HMRC’s manual sets a guideline: “from 6 April 2020 you can agree to a payment of £6 per week or £26 per month for monthly paid employees to an employee working regularly at home without the employer having to justify the amount paid.” “If the £6 guideline rate is paid the employee does not have to keep any records to demonstrate the additional expenditure.” The figure “is not a maximum. Greater amounts can be paid where the employer provides evidence to justify them.”. GOV.UK’s employer guide adds the condition for going higher: “If you cover any costs over the weekly limit (£6, or £26 a month for employees paid monthly), you need to be able to prove that the payments are no more than your employee’s additional household expenses.” If the payment is more than the extra costs, the excess is earnings and goes through payroll.

Who qualifies — including hybrid workers

The employer exemption turns on “homeworking arrangements”, which the Act defines as arrangements under which the employee “means arrangements between the employee and the employer under which the employee regularly performs some or all of the duties of the employment at home”. HMRC reads that broadly:

• “The exemption may also apply where the arrangement involves hybrid or flexible working.”
• Its example: “where an employee agrees to work 3 days each week on the employer’s premises and 2 days at home you should accept that the work at home is regular.”
• “The arrangements need not be in writing but usually will be.”
• But “The exemption does not apply where an employee works at home informally and not by arrangement with the employer.”

That is the practical difference from the old employee relief. An employee who worked at home by choice could never claim; an employer can pay the same person £6 a week tax-free, as long as the home working is regular and agreed. HMRC’s own summary of the relationship: “The exemption only applies to payments made by the employer. It does not entitle an employee to deduct unreimbursed household expenses.”

Claims for earlier years

GOV.UK keeps the door open for back years: “You can still claim for the 4 previous tax years.” From 2026–27, that means 2022–23 to 2025–26. Claims go online or on form P87. The conditions are the old ones, which were always narrower than the flat rate suggested:

• The job had to require it. “You cannot claim tax relief if you choose to work from home.” That includes where “your employment contract lets you work from home some or all of the time”, or where “your employer has an office, but you cannot go there sometimes because it’s full”.
• Evidence. “you must send evidence that you have to work from home if you’re either claiming: £6 a week for the tax year 2022 to 2023 or later the exact amount you’ve spent”.
• Only work costs. “You cannot claim for things that you use for both private and business use, such as rent or broadband access.”
• Value. “If you pay the 20% basic rate of tax and claim tax relief on £6 a week, you would get £1.20 per week in tax relief (20% of £6).”

HMRC’s detailed test for those years is in EIM32760, which requires that the duties done at home are substantive and that appropriate facilities are not available at the employer’s premises.

Hybrid working and travel to the office

The household-costs change has no effect on journeys. HMRC: “this does not affect travel expenses under section 337 ITEPA 2003.” What it does not do is make the trip from home to the office deductible for a hybrid worker. HMRC’s manual on travel from a home workplace says “For most people, the place where they live is a matter of personal choice.”, and that such journeys “the expenses of travelling from home to another workplace do not qualify for relief under Section 337 unless the location of the employee’s home is itself dictated by the requirements of the job.”

The useful exception runs the other way: “Employees who work at home are of course entitled to a deduction for the expenses of travelling to a temporary workplace in the same way as any other employee”. A hybrid employee sent from home to a client site or a temporary workplace is on business travel under the normal rules, set out on business travel expenses and tax; mileage is on HMRC mileage rates, and whether the travel time counts as working time on travel time and working time.

An employer’s checklist

• Tell staff that the HMRC claim ended for 2026–27, so nobody files one expecting relief.
• If you want to help with the cost, pay £6 a week (£26 a month) under a homeworking arrangement; no records are needed at that rate.
• Write the arrangement down, even though it need not be in writing: it is what shows the home working is regular.
• Hybrid patterns qualify where they are regular and agreed; informal evening work does not.
• Pay more only with evidence of the extra costs, or a scale rate agreed with HMRC.
• Leave travel rules alone: home-to-office stays commuting; home-to-temporary-workplace stays business travel.
• Put both in the expenses policy: expenses policy template.

This page quotes ITEPA 2003, HMRC’s Employment Income Manual, GOV.UK and HMRC’s impact note as read on 21 October 2026. The weekly and monthly rates are checked against two HMRC sources every time this site is built.

Common questions