Chancellor Ends Pandemic-Era Tax Relief for Remote Workers
Chancellor Rachel Reeves has announced the abolition of tax relief for employees who work from home, marking a significant shift in the government's approach to remote work. The move, revealed in Wednesday's Budget, will see the removal of income tax deductions for non-reimbursed home working expenses from April next year.
What the Changes Mean for Home Workers
Currently, millions of home workers can claim tax relief on expenses such as business phone calls and additional gas and electricity costs. The system allows claims of £6 per week, translating to £62.40 annually for basic rate taxpayers, £124.80 for higher rate taxpayers, and £140.40 for additional rate taxpayers.
The tax relief was originally designed during the pandemic when millions were ordered to work from home. However, many have continued to benefit if their job requires them to live far from their office or if their employer doesn't maintain a physical office space.
Government's Stance on Office Returns
Rachel Reeves has been consistent in her view that productivity gains are more likely to occur when people share physical workspace. 'I do think there is real value in bringing people together and sharing ideas and challenging each other,' she stated in a recent LBC Radio interview.
The Chancellor leads by example, noting that the Treasury is 'a pretty good department for getting colleagues in.' Civil servants are already expected to work at least three days per week in the office.
While advocating for office returns, Reeves acknowledged the importance of flexible working for family commitments such as school events or medical appointments. However, she clearly distinguishes this from predominantly working from home arrangements.
The government's position appears somewhat conflicted, as it simultaneously plans to make flexible working the default through its Employment Rights Bill. The removal of tax relief nonetheless signals a clear preference for office-based work, despite potential savings on commuting costs that home workers enjoy.
From April 2025, employers will still be able to reimburse employees for eligible home working costs without deducting Income Tax and National Insurance contributions, but the direct tax relief claim route will disappear.
