Relief for homeworking expenses: What employers can still reimburse

Relief for homeworking expenses: What employers can still reimburse

Working from home is now a normal part of business life for many employees. Whether someone works from home full time or only part of the week, it can lead to extra household costs.

Heating, lighting, business phone calls, insurance and other small additional costs can all increase when an employee works from home.

The tax treatment depends on whether the employer reimburses the employee, or whether the employee is trying to claim tax relief personally.

Employer reimbursement

There is a specific tax exemption that allows an employer to reimburse reasonable additional homeworking costs without the employee being taxed on the payment.

However, the rules are not unlimited.

The employee must be working from home under homeworking arrangements with the employer. This means the arrangement should be part of the employment setup, not simply a personal choice by the employee.

The costs must also be reasonable and incurred in carrying out the duties of employment. The exemption does not apply to costs that would be the same whether the employee worked from home or not. For example, normal rent or mortgage interest would not usually qualify.

The simple £6 per week option

Instead of calculating the actual additional costs, employers can pay a flat rate of £6 per week, or £26 per month, tax-free to cover the extra costs of homeworking.

This can be much simpler than asking employees to calculate a proportion of household bills. The same rate applies whether the employee works from home one day a week or five days a week.

For many employers, this is the cleanest and easiest way to support employees with homeworking costs.

Employee claims

The position is different where the employer does not reimburse the employee.

Before 6 April 2026, employees could claim tax relief for certain additional homeworking costs, either using the fixed £6 per week deduction or based on actual qualifying costs.

From 6 April 2026, that changes. A deduction for additional household expenses is expressly prohibited, even where the costs are incurred because the employee works from home.

That makes employer reimbursement more important for businesses that want to support staff working remotely.

Why records still matter

Employers should still keep clear records of payments made and the homeworking arrangements in place. A simple written policy can help show why the payment is being made and how it relates to the employee’s duties.

The key message

Homeworking expense relief has changed, but employers can still provide tax-free support where the conditions are met.

At williams lester accountants, we can help you review your staff expense policy and make sure homeworking payments are handled correctly through payroll and your accounting records.

Need to update your homeworking expenses policy? Speak to us before the next payroll run.