The Autumn 2025 Budget confirmed that employees who are required to work from home will no longer be able to claim tax relief for extra household costs.

Right now, under section 336 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), employees can claim relief for extra costs caused by homeworking, such as higher electricity or heating bills, if their employer does not pay for them.

This relief will be abolished by adding section 360B to ITEPA 2003, and the change will take effect from 6 April 2026. After that, employees cannot deduct unreimbursed homeworking expenses from their taxable income.

This measure only applies to those employees who have not had these costs reimbursed by their employer. This measure will not impact the existing ability for employers that reimburse employees for costs relating to homeworking where eligible without deducting Income Tax and National Insurance contributions.