We are sharing this update from ACCA, our professional body, for the interest of clients and contacts. The content is (c) ACCA
Changes that affect employees and the self-employed apply from April
Working from home has become a normal part of working life in the UK. For many years, employees and business owners could claim tax relief on some additional household costs related to homeworking. However, significant changes take effect from 6 April 2026, particularly for employees. These changes alter how relief can be claimed and who remains eligible.
Employees
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 ITEPA 2003.
Section 336 ITEPA allows for a deduction from earnings for allowable expenses that meet certain criteria that are set out within legislation.
From 6 April 2026, a new section 360B is introduced 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.
If the employer does not reimburse the expenses, the employee will be unable to claim a deduction in respect of those expenses (even if, rather than opting for the flat rate deduction, they claim the actual costs incurred and retain evidence of these costs). However, the statutory tax exemption where the employer makes a payment to the employee as a contribution towards homeworking costs (either based on actual expenditure incurred or, more commonly, at a round sum amount of up to £6 per week) is set to remain.
So, in a nutshell, employees cannot claim homeworking tax relief directly from HMRC. This applies even if they are contractually required to work from home.
More details can be found within the policy paper.
Self-employed: sole traders, partners
The 2026 changes specifically target employee tax relief and do not impact the deductions for expenses incurred by self-employed individuals. Self-employed individuals can continue to use and claim the work from home as office allowance.
They can claim a flat rate based on hours worked from home, ie £10 per month for 25-50 hours, up to £26 per month for more than 101 hours.
Alternatively, they can claim a proportion of household bills (heating, electricity, council tax) based on the number of rooms used and the time spent working, as explained within this article.
What is the position with directors?
A limited company director is treated as an employee of their company for expense purposes, and is being affected by these changes. Therefore, the company can reimburse reasonable additional home-working costs, most commonly which can remain at £6 per week without any receipts.
This allowance provided to directors is allowable expense for corporation tax and there are no PAYE or NIC implications for the directors, provided the payment reflects genuine homeworking costs.
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