Millions of individuals compelled to work remotely will lose the option to claim tax relief starting April 2026. Currently, HMRC allows you to seek tax relief for additional household expenses linked to remote work, such as utilities or internet, if your workplace lacks a dedicated office space for you. In the UK, the remote work allowance stands at a fixed rate of £6 per week. However, choosing to work from home disqualifies you from this tax relief.
During the pandemic, even a single day of remote work entitled individuals to tax relief, but as of 2022, claiming relief for choosing to work from home part-time due to hybrid working policies is no longer permitted. Chancellor Rachel Reeves announced in Budget 2025 the discontinuation of work from home tax relief for all workers effective this April. Nevertheless, employers can still provide untaxed financial assistance to cover remote work expenses.
Additionally, the freeze on tax thresholds will continue for an additional three years, prolonging the freeze on the income tax personal allowance of £12,570 until the end of the 2030/31 fiscal year. This freeze, known as fiscal drag, gradually pushes more individuals into higher tax brackets as their incomes rise, acting as a subtle means for the government to increase tax revenue without raising tax rates. The Office for Budget Responsibility estimates that by 2029/30, there will be an increase in basic-rate, higher-rate, and additional-rate taxpayers due to the threshold freeze.
The personal allowance dictates the income level before tax obligations commence, with the basic 20% income tax rate applying once that threshold is surpassed. Higher income tiers trigger the 40% and 45% tax rates. Similarly, the National Insurance payment threshold is established at £12,570, with an 8% contribution rate for earnings above this amount, and a 2% rate for income exceeding £50,270.
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