Rachel Reeves Confirms End of Working From Home Allowance Before Her Departure as Chancellor

Rachel Reeves has confirmed the imminent removal of the working from home allowance as she prepares to leave her role as Labour Party Chancellor. Following Sir Keir Starmer’s resignation, Ms. Reeves is widely expected to be replaced in No 11 Downing Street by Andy Burnham.

Starting April 6, 2026, approximately 300,000 UK workers currently claiming an annual home working allowance will lose this tax relief entirely. This measure affects those who incur extra household expenses such as heating, electricity, and business phone calls while working remotely.

For basic-rate taxpayers, this change means a loss of around £62 per year, while higher-rate taxpayers can expect their tax bills to increase by about £124.

Clair Williams, head of employment tax at Azets, explained, “This tax relief, which has been in place for many years, allows claimants to receive relief on up to £6 a week without needing to provide receipts to HMRC. Removing this relief shifts the financial burden away from the government.”

She added, “Employers can still choose to reimburse employees for these costs without deducting income tax or National Insurance contributions. Nevertheless, this cost transfer comes amid a rising business tax burden, now the highest in 28 years at 32 percent.”

Williams pointed out that local employers might face pressure to revise reimbursement policies, especially since some remote employees do not have physical workplaces to report to. HMRC estimates this policy change will save the Treasury £115 million over five years.

Despite the significance of this change, it has received relatively little public attention, Williams noted. Those currently claiming the relief have until the 2025-2026 tax year to submit claims, with retrospective claims allowed for up to four previous tax years. The deadline for claiming relief for the 2021-2022 tax year is April 5, 2026.