Working from home tax relief: who actually qualifies (and what it's worth)

Hybrid working is very much the norm in modern businesses, and many remote workers may assume they can claim back some of the costs they incur as a result. But HMRC has been gradually closing this window since the COVID-19 pandemic exceptions ended.

First, though, let’s go over the basics.

What is Working from Home (WFH) Tax Relief?

Working from home (WFH) tax relief is a UK tax break that lets employees claim back a small amount of tax to cover the extra household costs of having to work from home.

This covers things like:

additional gas used for heating the home for longer
more electricity for equipment and computer use
business phone calls used while working

Here's what the GOV.UK guidance actually says, and what it means in practice for business owners.

What is it worth?

Rate	What it means
£6 a week flat rate	No receipts are needed, but the relief is small. At the basic rate (20%), that's £1.20 a week, or about £62 a year.
The exact amount you've spent	This is potentially worth more, but you'll need receipts, bills and a defensible apportionment between business and private use.

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Claims can be backdated to cover the current tax year plus the four previous tax years, so a long-standing eligible claim can be worth a few hundred pounds in one go!

Who can (and can’t) claim Working from Home Tax

The eligibility criteria for Working from Home Tax Relief have changed and individuals can no longer claim relief where the employer hasn’t reimbursed the cost, and the to claim the working from home allowance the employee must be obliged to work from home, rather than doing it at their discretion.

You cannot claim if working from home is a choice, even if it’s one covered by the individual’s contract.

Again, according to HMRC, this includes:

If employment contracts allow either flexible or full-time remote working
If the office is too full on a given day
Any other “hybrid” arrangements in which working remotely is optional

Long story short: If your staff could work at the office or other premises but choose not to, there is no Working from Home Tax allowances available. Working from home has to be a contractual obligation, not a perk or a preference.

What can you actually claim for?

Working from Home Tax Relief covers additional household costs directly associated with remote working, which is actually quite a narrow list.

In real terms, this means business phone calls, and gas and electricity for the work area.

This is bad news for anyone hoping to subsidise their rent, mortgage interest, broadband bills, or council tax. HMRC argues that you would be paying these anyway.

A reality check for business owners

For anyone running a small business and employing staff, there are three major takeaways that we encourage a clear understanding of.

1. Your employees no longer qualify for tax relief

If you’ve moved to a hybrid working model, included remote working into contracts, or even if you’ve just let people stay at home to work occasionally, your team cannot claim this relief. ‍

2. You can reimburse ELIGIBLE home workers up to £6 a week tax-free

If a member of staff genuinely has to work from home, you can pay them a homeworking allowance without it counting as taxable pay or triggering National Insurance Contributions (NICs). But the eligibility here is still strict: it must be required, not chosen.

If you get this wrong, you’ll have accidentally created a taxable benefit, which you’ll need to report to HMRC.

3. Directors of limited companies are employees too

This one is important because if you run your business through a limited company, but genuinely have no office (and no realistic option to work elsewhere), then the same rules will apply to you. This is commonly missed and is definitely worth a chat with your accountant.

Why is it all changing?

HMRC's working-from-home rules were written for a pre-2020 world, and they haven't really kept up with how most small and medium-sized businesses actually operate in the 2020s. The income tax relief is no longer available after 5 April 2026, and the eligibility net is much, much smaller than the cultural shift to remote working would suggest.

The trick: Working out who qualifies

£6 a week sounds fairly simple until you start applying the "choice vs requirement" test to a full payroll, including director payments, or try to backdate a claim across four years of varied working patterns.

At Gravitate, we help business owners with a wide variety of team setups work out exactly what's claimable and what's reimbursable through payroll, without creating a benefit-in-kind, and what's better left alone!