300,000 working Brits will lose out on at least £62 in 2026 as the government scraps the work-from-home tax relief. Beginning in April 2020, towards the beginning of the Covid-19 pandemic, the tax relief became available to thousands of workers as offices shut. Working from home has become the norm for many businesses since the pandemic.
Basic rate taxpayers who work from home can now expect to pay an extra £62 per year as the tax relief is scrapped. Those on a higher rate will pay £124 more, while additional rate taxpayers will pay an extra £140. The flat fee, which allowed workers to earn £6 tax-free, was available to those who had no choice but to work from home. People who had the option to work from home but had an employer with an office could not claim it.
The move was announced as part of the Labour Party’s Autumn Budget. Financial experts have criticised the government’s decision, pointing out the extra money pressures often faced by people who work from home full-time.
Kate Underwood, Founder at Southampton-based Kate Underwood HR and Training, said: “If you worked from your spare room to keep things going, the government’s thank-you gift is basically: ‘About that £6 a week, we’ll have that back now’. From April 2026, this hits for people who have no office to go to or need adaptations just to work.
“They are already paying extra to heat the house and run the kit. That simple £6 a week was one of the few nods that working from home is not free. Now it becomes ‘prove every penny’ and hope HMRC agrees.”
Meanwhile, David Stirling, financial adviser at Belfast-based financial advisory firm Mint Wealth, called the move a “slap in the face” to workers. “Remote workers, consider yourselves quietly squeezed by the chancellor,” he said.
Underwood added: “For small businesses, it is yet another quiet job dumped on your lap. You either pick up some of the cost, drown in receipts or risk losing good people who simply cannot afford to work from home any more.
“If you or your team have been required to work from home and have never claimed, talk to your accountant now and consider backdating what you can. Then get clear on who is genuinely home-based, what you will cover after 2026 and build it into pay and policy.”
Colette Mason, Author & AI Consultant at London-based Clever Clogs AI, warned: “The small amount the Treasury saves by scrapping this relief will be dwarfed by the long-term loss of revenue from wages and payroll taxes as businesses automate office jobs they can no longer justify retaining due to bureaucratic friction.”