From 6 April 2026, that chapter closes.  Employees will no longer be able to claim tax relief themselves for working-from-home costs through Self-Assessment or form P87.

That does not mean all tax-free treatment disappears, but the mechanism changes and the technical conditions remain critical.

What Still Applies for 2025/26?

For the final year (2025/26), an employee can still claim relief where:

• They are contractually required to work from home, and
• They incur additional household costs as a result, and
• The employer does not reimburse those costs.

The flat rate remains £6 per week (£312 per year), unless higher actual additional costs can be evidenced.  The phrase “contractually required” is the dividing line, as a hybrid arrangement agreed for flexibility is not the same as being required to work from home.

Why the Change?

The underlying legislation (ITEPA 2003 s336) has always required that employment expenses be “Wholly, exclusively and necessarily incurred in the performance of the duties.” And that statutory test is strict.

During the pandemic, HMRC relaxed its administration because homeworking was compulsory. But once restrictions lifted, many employees continued claiming relief even where their contract named an office as their permanent workplace, and the employer’s premises remained available.

In some cases, commercial firms emerged offering to submit tax refund claims on behalf of employees for a fee – often advertising that “everyone who worked from home can claim”. Those claims did not always test the contractual requirement properly.

HMRC has since reviewed a significant number of these claims and challenged those that did not meet the statutory conditions. Rather than continue policing large volumes of borderline claims, the government has removed the employee-claim route altogether from 2026/27.

Case Study 1 – Hybrid by Agreement

Emma is a marketing manager. Her contract specifies the Cambridge office as her permanent workplace. Since 2021, she has worked from home three days per week under a flexible working agreement.

She claimed £6 per week for the last three tax years.

Technically, the claim is vulnerable. She was permitted to work from home but not required to as the office remained available. Under the statutory “necessarily incurred” test, her household costs were avoidable in performing her duties.

If reviewed, HMRC could withdraw the relief and charge interest.

Case Study 2 – Fully Remote by Contract

David’s employment contract states his role is fully remote and that he has no access to employer premises.  He works from home five days per week and incurs additional heating and electricity costs during working hours.

In 2025/26, he can still claim relief (if not reimbursed).
From 2026/27, he cannot claim personally – but his employer can reimburse reasonable additional costs tax-free.

So, What Is a “Reasonable Additional Household Cost”?

HMRC’s guidance focuses on additional costs incurred because of work.

Examples may include:

• Increased electricity and gas usage during working hours
• Additional metered water usage
• Business telephone calls outside an existing personal package

Costs that do not qualify include mortgage interest,  rent, Council tax and broadband already in place for private use.

The practical test is simple:  Would this cost have been incurred anyway?  If yes, it is unlikely to meet the statutory “wholly, exclusively and necessarily” requirement.

From April 2026 – The Employer Route

From 2026/27:

• Employees cannot claim the £6 per week relief themselves.
• Employers may reimburse reasonable additional household costs tax-free where homeworking is contractually required.

If an employer instead pays a flat “homeworking allowance” without linking it to additional costs, that payment is treated as earnings. It must go through payroll and be subject to Income Tax and NIC in the normal way.

A final note for Employers

The financial impact on an individual is relatively modest – but the risk associated with compliance are not.

If you operate hybrid or remote teams, now is the time to review:

• What your contracts actually say about place of work
• Whether reimbursements reflect genuine additional costs
• Whether payroll treatment aligns with policy

The relief is narrowing – not vanishing entirely, but the informal assumptions made in 2020 do not automatically survive into 2026.