Employees who are required to work from home to perform the duties of their employment are entitled to tax relief on their actual costs under section 336 ITEPA2003.
Section 336 ITEPA allows for a deduction from earnings for allowable expenses that meet certain criteria that is set out within legislation.
As an administrative easement, 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. The vast majority of claimants use the easement of £6 per week to claim, which does not require receipts to be provided.
For the tax years 2020 to 2021 and 2021 to 2022, eligibility was widened to include employees who had to work at home because of the COVID-19 pandemic rather than because of their specific employment duties.
Why?
There are HMRC concerns around non-compliance. After checking claims, over half have been deemed to be ineligible for the relief, indicating high levels of non-compliance.
So what is changing
This measure inserts s360B into Chapter 11 of Part 4 ITEPA 2003 to disallow a deduction from earnings for additional household expenses incurred in employment duties, where those expenses are not reimbursed by the employer. The measure uses the same definition of ‘household expenses’ as defined in s316 ITEPA 2003.
This 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.
Employers can still reimburse employees for these costs where eligible without deducting Income Tax and National Insurance contributions.
When
Operative date is from 6th April 2026.
PAYadvice.UK 27/11/2025