Overview
- From April 6, 2026, HMRC will abolish the flat-rate deduction for additional household costs, including for staff required to work from home.
- Unreimbursed employee claims will no longer be allowed, though employers may still cover home-working expenses tax-free if they choose.
- Government forecasts suggest roughly 300,000 people will be directly affected, with typical annual tax increases of about £62 for basic-rate and £124 for higher-rate taxpayers.
- The allowance, widened during the pandemic and narrowed in 2022 for hybrid workers, will now be removed for the vast majority of claimants under the 2025 Budget.
- The policy forms part of a wider Budget that extends the income tax threshold freeze to 2030–31, which the OBR estimates will add 780,000 basic-rate, 920,000 higher-rate and 4,000 additional-rate taxpayers by 2029–30.