How tax relief for working from home has changed (2026 UK tax guide)

Working from home has undergone a profound transformation in recent years. What was once a temporary, mandated necessity has evolved into something far more nuanced and multifaceted. It’s now shaped by the growing freedom and ability for individuals to work as digital nomads, a solidifying expectation for hybrid working amongst the workforce, or even a deliberate long-term strategic shift in how businesses operate from a corporate level decision. However, as behaviour changes, so do the tax rules. What was once a simple and widely accessible tax relief now undergoes a fundamental restructure – particularly for employees. From April 2026 onwards, individuals will find the relief they previously relied on no longer available in the same way.  This guide provides a comprehensive, up-to-date explanation of how tax relief for working from home has changed, what you could claim before, what you may be able to claim now, and how the rules differ depending on your circumstances.

What is working from home tax relief?

Working from home tax relief is designed to compensate you for the additional household costs incurred as a direct result of carrying out work duties from home. These costs typically include the increased spending on electricity, heating, internet usage and business-related telephone calls. Nevertheless, there is a distinction between general household costs and these additionally accrued expenses such as rent, mortgage payments, and council tax. Whilst these cannot be claimed by employees required to work from home, they can for those who are self-employed or are company directors working from home.

Previously, there have been two ways to claim working from home tax relief – use the simplified flat-rate allowance or claim a portion of your actual costs based on detailed and justified calculations. However, now, how you can claim and how much, will be entirely dependent on whether you are employed or self-employed.

How the working from home tax relief rules worked before April 2026

Prior to April 2026, claiming tax relief for working from home was relatively straightforward for both employees and company directors. The general rule was that if you were required to work from home because either your employer did not provide a suitable workspace or because it was necessary for your role to work remotely from home, then you would be able to claim tax relief on the additional household costs.

The most common method to claim for this was the flat-rate allowance of £6 per week which equated to £312 for the whole year. However, it’s important to understand that £312 is not what is deducted from your tax bill but your own personal marginal tax rate of this amount. What this means is that if you are a basic rate taxpayer, you would receive 20% of £312 in tax relief, 40% of £312 if you are a higher rate taxpayer or 45% if you are an additional rate taxpayer.

Importantly, when claiming tax relief for working from home in this manner, there was no need to keep detailed records or receipts. This was therefore hugely convenient for many taxpayers who wanted a simple and easy way to cut their tax bill.

Whilst limited company directors were expected to make a claim for tax relief in the same way as how an employee would, sole traders had to use a different allowance. It worked in a similar way, but HMRC provided a monthly allowance based on the number of hours you worked from home. If you worked between 25 and 50 hours per month from home, you could claim £10 per month. This increased to £18 per month for 51 to 100 hours, and £26 per month if you worked more than 101 hours. For example, a sole trader working 120 hours per month from home would be entitled to claim £26 per month. Over a full year, this amounts to £312. Coincidentally, this is the same as the employee flat-rate allowance.

For those who incurred more than this fixed allowance, it was possible to opt into claiming for your actual expenses, but this required strict record keeping, and accurate calculations.

How the working from home tax relief rules have changed since April 2026

As of 6 April 2026, the most drastic change is the removal of the ability for employees to claim tax relief for working from home directly from HMRC. This truly marks a major policy shift and under the new rules, employees are no longer able to submit a claim (either through their self-assessment tax return or via HMRC’s online portal). The £6 per week flat rate relief, which was once widely used, is effectively abolished as a standalone claim.

Instead, the responsibility has shifted entirely to employers. Employers are able to choose whether they wish to reimburse an employee for homeworking expenses and can offer to do this tax-free up to the maximum of £6 per week. Importantly, this is not mandatory for employers to do so.

If they opt-in to offer this reimbursement, the employer can claim it as a tax-deductible business expense from their corporation tax return and so long as it does not exceed the £6 per week threshold. The employee pays no income tax or NI on this reimbursement. If the employer chooses not to reimburse employees, then they have no recourse to recover any additional expenses incurred as a result of working from home. It has been suggested that this change has been implemented to support those employers who wish for their employees to return to the workplace.

Company directors are impacted in the same way as they are treated in the same manner as employees. However, for those who are directors of their own limited company, then a claim for tax relief is unlikely to pose as a challenge. Alternatively, company directors are still able to charge their own company for renting a room in their own home as well as associated working from home expenses incurred. However, whilst this is tax deductible for the company, it is also subject to income tax for the director personally, so it’s important to weigh up which option would leave you better off.

The change does not affect self-employed individuals. Sole traders can continue to use the simplified flat rate claim method or calculate a portion of their actual expenses as they did before.

How sole traders claim allowable expenses for working from home now

Sole traders have more flexibility when it comes to how much tax relief you’re able to claim when using your home for work. We’ve already established that you’re still able to claim the flat rate allowance through your self-assessment tax return if you wish. For ease of use, this is by far the most convenient. However, often the cost of home working can far exceed this allowance. In this instance, it may be more beneficial to claim you’re a portion of your household costs incurred as result of business use. Although this involves more calculations, you’ll almost certainly reduce your tax bill by much more.

The types of costs you can include are broader than many expect. Typical allowable expenses include electricity, gas, council tax, business-use water (where relevant), home insurance (if not covered separately), mortgage interest or rent, repairs and maintenance related to your workspace, business phone calls, and broadband. The key distinction is that you can only claim the business proportion. For example, repainting a room used as an office may be allowable, but installing a new bathroom suite would not be.

Now that we’ve established what you can claim as an expense, let’s move on to how you calculate how much you can claim. There’s no single prescribed formula, because HMRC recognises that every home and working pattern is different. Instead, your calculation should be reasonable, consistent, and justifiable. Broadly, it comes down to two factors: how much of your home you use for work, and how much time you spend working there.

For most people, this means apportioning costs by room and then adjusting for time. You might divide total household costs by the number of rooms, then apply a percentage based on how often each room is used for business purposes. If you live in a studio or open-plan space, a floor-area percentage may be more appropriate.

For example, imagine you live in a five-room house and incur £1,200 per month in relevant household costs. If you use one room primarily for business, you could allocate one-fifth of those costs, giving £240. If that room is used for work 8 hours a day rather than 24, you would restrict the claim to one-third of that amount, resulting in an allowable expense of £80 per month, or £960 per year.

You can refine this further by applying different usage percentages across multiple rooms. Suppose your monthly electricity bill is £80. Dividing this across five rooms gives £16 per room. If you estimate that you use a study for 30% of your time and a kitchen for 10% of your time for business purposes, you could claim £4.80 (30% of £16) for the study and £1.60 (10% of £16) for the kitchen—£6.40 in total for electricity. This same principle can then be applied across your other household bills.

It’s important to sense-check your claim against the nature of your work. Someone running an online consultancy or tutoring business is likely to have a stronger basis for claiming homeworking costs than, say, a builder who spends most of their time on-site. HMRC will expect your claim to reflect commercial reality.

Finally, avoid designating any part of your home as exclusively business use where possible. While it may seem logical, doing so can create Capital Gains Tax implications when you sell your property, as that portion may not qualify for full private residence relief.

Ultimately, claiming working from home expenses as a sole trader is about striking the right balance between simplicity and accuracy. A well-reasoned approach not only reduces your tax bill but ensures you’re properly recognising the real cost of running your business from home.

Don’t miss out on tax relief from previous years

Although the rules have tightened from April 2026 onwards, it’s important to be aware that that you may still be able to submit your claim for earlier tax years. Under current rules set by HMRC, you can typically backdate a claim for the previous four tax years.

This means that if you were eligible to claim working from home tax relief but didn’t do so at the time, you may still have an opportunity to recover that tax. For example, a claim made in the 2026/27 tax year could potentially cover back to the 2022/23 tax year, depending on your circumstances.

For employees, this is particularly relevant given the recent rule changes. If you were required to work from home prior to April 2026 and didn’t submit a claim, you may still be able to receive tax relief for up to 2022.

For sole traders, the same principle applies. If you have not previously claimed the allowable portion of your household costs, you can amend prior self-assessment tax returns to include these expenses. Depending on how long you’ve been working from home, this could result in a meaningful tax repayment.

Get help claiming tax relief for home office costs

Make sure you’re not leaving money on the table. Claiming working from home expenses sounds straightforward, but in reality, many sole traders either underclaim or take an approach that wouldn’t stand up to scrutiny from HMRC. The difference between a rough estimate and a well-structured claim can add up to hundreds of pounds each year.

That’s where the right advice makes all the difference. By taking the time to understand how you actually use your home, we can help you maximise your claim while ensuring everything is calculated fairly, consistently, and in line with HMRC expectations.

If you’re unsure whether you’re claiming enough—or worried about getting it wrong—now is the time to review your approach. Get in touch with us to make sure you’re claiming everything you’re entitled to, without taking unnecessary risks.