Honestly, not having to pay for parking and unnecessary fancy lunches are just two reasons why working from home (WFH) is great.
As well as the perfect work-life balance and not having to talk to people, there are many money-saving benefits by not going into the office - including a key tax allowance worth up to £124 a year.
The Working From Home Allowance was introduced during Covid and was used by three million people at its peak.
Employees who had to work from home, and were not reimbursed by their employer, could previously claim a flat-rate tax relief of £6 per week.
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This equated to about £62 per year for basic-rate taxpayers and £124 per year for higher-rate taxpayers earning more than £50,270.
Workers could also claim work-from-home tax relief for the exact amount spent, claimed through HMRC online or by submitting a P87 form.
What's changed?
The UK government has scrapped the entire tax relief for WFH employees from the tax year 6 April 2026 to 5 April 2027.
So the automatic deduction costs and exact costs employees could previously claim are no longer available.
While employees can no longer claim the allowance, employers can still reimburse certain home-working costs without the payment being taxed.
"This tax relief, in place for many years, covers an estimated 300,000 people who incur additional household expenses, such as heating, electricity and business phone calls, in their employment duties," explained Clair Williams, head of employment tax at Azets, Cornish Stuff reports.
How to claim back tax for the past four years
Workers who qualified for the allowance can still claim tax relief for the current tax year and up to four previous tax years.
This means that eligible workers can still claim back money they missed if they worked from home during that period.
However, claims must relate to times when employees had to work from home and were not reimbursed by their employer.
"Employers can still reimburse employees for these costs, if eligible, without deducting income tax and National Insurance contributions," Williams added.
She added that the change could force employers to step in and cover the extra costs.
“It is also worth bearing in mind that local employers may come under pressure to change their policies on reimbursement to provide WFH staff with financial reassurance, and some staff don’t have workplaces to go to because their employer doesn’t actually have physical premises,” Williams said.
“Getting rid of the measure will, based on HMRC’s own calculations, save the Treasury £115 million over five years from introduction.”
14 other changes UK taxpayers should know
Making Tax Digital – From April 2026, self-employed workers and landlords earning over £50,000 must keep digital records and submit quarterly tax updates using software.
Inheritance tax changes – Agricultural and business property relief has been capped at £2.5m per person (£5m for couples).
Dividend tax increase – Rates have gone up to 10.75 percent and 35.75 percent, affecting investors and company directors.
Council tax rises – Many councils are increasing bills by around 4.99 percent.
New employment benefit exemptions – Some work expenses, eye tests and flu vaccinations have become tax-free.
Road tax increases – Standard Vehicle Excise Duty has increased to £200.
EV company car tax rises – Benefit-in-kind rate has increased to four percent.
Charitable legacy rules tightened – Gifts must go to approved UK charities.
Air Passenger Duty increases – Flight taxes risen across most routes.
Investment scheme changes – EIS/VCT limits increased but VCT tax relief falls.
Business sale tax increases – BADR capital gains tax rises to 18 percent.
Carried interest taxed as income – Fund managers face higher rates.
Property tax adjustments – ATED rises and regional property tax rules change.
Bingo Duty scrapped – The 10 percent tax on bingo operator profits is abolished.
Anish Vij