Homeworking costs in 2026: employers can still reimburse
In this hypothetical, a monthly-paid employee has agreed with their employer to work from home two days a week from November 2026 to January 2027. A colleague says homeworking tax relief ended in April. For the employee's own claim to HMRC, that is right. For the employer, it is not. From 6 April 2026, employees can no longer claim an Income Tax deduction for household costs their employer does not reimburse, but employers can still reimburse eligible additional household costs without Income Tax or National Insurance contributions (NICs). This covers those household costs in 2026 to 2027. Equipment has separate rules, including its own change from 6 April 2026, and is not covered here.
What changed and what did not
HMRC's Employment Income Manual at EIM32759 explains that section 360B of the Income Tax (Earnings and Pensions) Act 2003 prevents a section 336 deduction for household expenses from 6 April 2026. The April 2026 Employer Bulletin describes the same change and adds that eligible claims for earlier years can still be made within the previous four tax years. The bulletin also confirms that eligible employer reimbursements can remain free of Income Tax and NICs. The employer Income Tax exemption under section 316A continues.
The tax exemption does not oblige an employer to pay anything. It decides how payments are treated if the employer chooses to make them. An employee whose costs are not reimbursed has no 2026 to 2027 claim to HMRC for the difference, and there is no standard £6 a week they can claim for themselves.
Sources and context, checked :
Which arrangements and costs qualify
The employer and employee must have arrangements under which the employee regularly works at home. They do not have to be written, though they usually are. Hybrid and flexible patterns can qualify. Informally taking work home does not.
The costs must be reasonable additional household costs of doing the work, such as extra heating, lighting and business calls. Costs that stay the same whether or not the employee works at home, such as mortgage interest, rent, council tax and water rates, do not qualify. Broadband the employee already had is treated differently from a connection needed for the work.
Sources and context, checked :
- EIM01472 - Employment income: household expenses: payments to reimburse additional costs: introduction - HMRC internal manual - GOV.UK
- EIM01474 - Employment income: household expenses: what costs can be reimbursed? - HMRC internal manual - GOV.UK
- Expenses and benefits: homeworking: Homeworking expenses and benefits that are exempt from tax - GOV.UK
Three ways to set the amount
The employer can pay an agreed £6 a week, or £26 a month for monthly-paid employees, without records proving the extra costs. HMRC calls this a guideline, not a maximum. A higher amount can be paid if it reflects evidenced actual additional costs, or follows a scale rate agreed in advance with HMRC. For actual costs, the employer keeps its calculation and the employee's evidence. HMRC's National Insurance Manual takes the same line for NICs: reasonable reimbursements can be disregarded, and larger amounts need evidence of the costs.
The guideline removes the need to prove the amount. It does not remove the need for a regular, agreed homeworking arrangement.
The hypothetical in numbers
In this original hypothetical, the employer chooses the monthly guideline for the three months. The second row shows the alternative if records instead established reasonable extra household costs of £38 a month.
The rows are alternatives, not additions. The actual-cost route pays £36 more because the records support £36 more of extra spending. Paying the £26 guideline and also reimbursing the same costs at £38 would pay for them twice.
| Route | Per month | Three months |
|---|---|---|
| Monthly guideline | £26 | £78 |
| Evidenced actual extra costs, instead | £38 | £114 |
Sources and context, checked :
Records to keep
A flat payment to everyone who sometimes works at home is not the same as reimbursing agreed homeworking. Tie each payment to an arrangement and a chosen route.
- The arrangement, its working pattern, start and end dates and who approved it
- The route chosen: weekly or monthly guideline, evidenced actual costs, or an HMRC-agreed scale rate
- For actual costs, the employer's calculation and the employee's evidence
- Payroll and expense coding that matches the route
- A review whenever the working pattern changes
Sources and context, checked :