HMRC is scrapping a key tax allowance worth up to £124 a year for 300,000 UK households from today, Monday April 6. As part of the changes introduced by government and applied to HMRC from HM Treasury for the new tax year, one allowance is being completely abolished for 2026-27 tax year: Working From Home Allowance.
According to the Chartered Institute of Taxation, the government is ending Income Tax relief for people who work from home and are not reimbursed by their employer to meet their costs.
The allowance, which was introduced during lockdowns in Covid, gave workers £6 a week tax relief, which would be worth £62 a year for a basic rate taxpayer earning less than £50,270 and £124 a year for a higher rate taxpayer earning more than £50,270 a year.
However, payments made to cover working from home expenses to employees continue to be tax-free.
The CIOT explains: “From 6 April 2026, the government will discontinue the income tax relief available to individuals who work from home and are not reimbursed by their employer for the additional household costs of doing so.
“Previously, the standard flat-rate claim was £6 per week, resulting in an annual tax saving of approximately £62 for basic rate taxpayers (£124 for higher rate taxpayers).
“Around 300,000 people currently receive tax relief for homeworking costs, down from nearly 3 million at the pandemic peak. (NB. Payments by employers to employees to reimburse the same expenses continue to be free of tax and NICs.)”
Other tax changes introduced today by HMRC include an increase in dividend taxes which will cost the average small business owner an extra £600 a year in tax, and an unpopular change to Inheritance Tax for farmers which will introduce a 20% Inheritance Tax charge on the value of any farm estate assets above a £2.5M threshold.