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The Autumn Budget 2025 announced that from 6 April 2026, employees will no longer be able to claim tax relief on non‑reimbursed homeworking expenses (like heating, electricity, internet, or business calls). Only costs directly reimbursed by employers will remain tax‑free.

The Chancellor scrapped the homeworking tax relief to simplify the tax system, reduce administrative costs, and raise revenue. The government argued that the relief was originally introduced during the pandemic, but is no longer justified now that remote working is a choice for many rather than a necessity.

Key Changes in the Budget
Abolition of tax relief for employees:

Previously, workers required to work from home could claim tax relief on household costs.

From April 2026, this relief is being scrapped for around 300,000 employees.

Employer reimbursements unaffected:

Employers can still reimburse homeworking expenses (e.g., broadband, heating) without deducting Income Tax or National Insurance.

The change only affects employees who pay these costs themselves and do not get reimbursed.

Financial impact:

Basic rate taxpayers will see an average annual tax increase of about £62 due to the removal of this relief.

Why This Matters
For employees:

If your employer doesn't cover your homeworking costs, you'll lose the ability to offset them against tax.

This could make working from home more expensive, especially for those with high energy or internet bills.

For employers:

Businesses may face pressure to offer reimbursements to retain staff who value remote work.

Reimbursing costs remains a tax‑efficient option, as these payments are exempt from Income Tax and NIC.

Risks & Trade‑offs
Cost of living pressures: Removing relief coincides with rising energy costs, potentially discouraging homeworking.

Workforce flexibility: Employers may need to rethink remote work policies if employees feel financially penalized.

Compliance clarity: Workers must be careful not to mistakenly claim relief after April 2026, as HMRC will disallow it.

What You Can Do
Check your employer's policy: See if they plan to reimburse homeworking expenses.

Budget ahead: Factor in the loss of relief when planning household finances.

Consider alternatives: If commuting costs are lower than homeworking expenses without relief, hybrid work may become more attractive.

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