Allowance For Work From Home
- MAZ
- Jun 16
- 15 min read
Understanding the Work From Home Allowance for 2025-26
So, you’re working from your kitchen table, juggling Zoom calls and household chores, and wondering if there’s any tax relief to ease the sting of those extra electricity bills? For the 2025-26 tax year, the UK’s work-from-home (WFH) allowance is a lifeline for employees and business owners alike, but it’s not as simple as it was during the pandemic. Let’s dive into the nitty-gritty of what this allowance is, who can claim it, and how much you might save, all based on the latest HMRC rules as of 2025.
The Audio Summary of the Key Points of the Article:
What Is the Work From Home Allowance?
Right, let’s start with the basics. The WFH allowance, officially known as “homeworking expenses” by HMRC, is a tax-free payment or relief designed to cover the extra costs you incur when working from home. These costs include things like heating, electricity, and even a portion of your broadband if it’s essential for your job. For 2025-26, HMRC allows employers to pay employees a flat rate of £6 per week (or £26 per month) without needing receipts. This translates to £312 annually if you work from home all year. If your employer doesn’t pay this, you can claim tax relief directly from HMRC, reducing your taxable income by the same amount.
Who Can Claim the Allowance in 2025-26?
Now, here’s where it gets a bit tricky. Not everyone who works from home can claim this relief, thanks to tightened rules post-COVID. To qualify for the 2025-26 tax year, you must meet one of these strict HMRC criteria:
Your job requires you to work from home, meaning your employer has no office or you live too far to commute reasonably.
You’re performing “substantive duties” at home—core tasks of your job, not just answering emails in your pyjamas.
Your employer hasn’t already reimbursed your additional expenses, like utility bills or equipment costs.
Be careful! If you’re working from home by choice or because your employer offers hybrid working, you’re out of luck. The days of blanket relief during the 2020-21 and 2021-22 tax years are gone, when anyone forced to WFH due to lockdowns could claim. Now, HMRC is stricter, and you’ll need to prove your home is your workplace.
How Much Can You Save?
Let’s crunch some numbers. The standard WFH allowance is £6 per week, or £312 per year. If you claim this as tax relief, the savings depend on your income tax rate:
Basic rate taxpayers (20%): £312 × 20% = £62.40 per year.
Higher rate taxpayers (40%): £312 × 40% = £124.80 per year.
Additional rate taxpayers (45%): £312 × 45% = £140.40 per year.
Here’s a handy table to break it down:
Tax Band | Annual Allowance (£) | Tax Relief Rate | Annual Saving (£) |
Basic (20%) | 312 | 20% | 62.40 |
Higher (40%) | 312 | 40% | 124.80 |
Additional (45%) | 312 | 45% | 140.40 |
If your actual costs exceed £6 per week, you can claim more, but you’ll need detailed records—like utility bills showing increased usage during work hours. For example, Idris, a graphic designer from Cardiff, calculated his home office consumed £10 extra per week in electricity and heating. He submitted evidence to HMRC and claimed £520 annually, saving £208 as a higher-rate taxpayer. But beware: justifying higher claims can be a hassle, and HMRC may challenge them.
How Do Employees Claim the Allowance?
So, you’ve checked the criteria and think you’re eligible—now what? If your employer pays the £6 weekly allowance, it’s tax-free, and you don’t need to do anything. But if they don’t, you can claim relief directly through HMRC. Here’s how:
Online: Use the HMRC online service (gov.uk/claim-tax-relief-expenses) to submit your claim. You’ll need your Government Gateway ID and details of your employment.
By Post: Complete form P87 if you don’t file a Self-Assessment tax return. Send it to HMRC with evidence if claiming above £312.
Self-Assessment: If you already file a tax return, include the allowance under “employment expenses.”
Once approved, HMRC adjusts your tax code, reducing your taxable income. For example, Nerys, a teacher from Swansea, claimed £312 for 2024-25. Her tax code changed from 1257L to 1313L, spreading her £62.40 saving across her monthly payslips. Claims can be backdated up to four years, so you could still apply for 2021-22 if you were forced to WFH during the pandemic.
What About Backdated Claims for 2020-21 and 2021-22?
Now, here’s a golden nugget. If you worked from home during the COVID-19 pandemic but didn’t claim relief, you can backdate claims for 2020-21 and 2021-22. The rules were looser then, so even if you WFH due to government restrictions, you’re likely eligible. The process is the same as above, but you’ll need to specify the tax years. For instance, Gwilym, a marketing manager from Bangor, backdated claims for both years, netting a £124.80 cheque as a basic-rate taxpayer. Just don’t delay—HMRC’s four-year limit means 2020-21 claims expire in April 2026.
Why Are the Rules So Strict Now?
Let’s be real: the government’s tightened the screws because WFH has become the norm for many. During the pandemic, millions claimed relief, costing HMRC a fortune. By 2025, with hybrid working commonplace, they’ve scaled back to focus on those genuinely required to work from home. This shift has frustrated employees like Sioned, a Bristol-based IT consultant, who works remotely by choice and can’t claim despite higher utility bills. The lesson? Check your eligibility carefully, and don’t assume you qualify just because you’re WFH.
Can You Claim More Than £312?
Curious if you can push for more? Yes, but it’s not easy. If your costs exceed £6 per week, you must provide evidence like:
Utility bills showing increased usage during work hours.
A breakdown of your home office’s proportion of your house (e.g., one room out of five).
Receipts for business-related phone or broadband usage.
For example, Eleri, a freelance editor from Aberystwyth, claimed £15 per week by proving her home office used 20% of her home’s utilities. Her detailed spreadsheet impressed HMRC, saving her £312 as a higher-rate taxpayer. But HMRC warns that excessive claims without solid proof may be rejected, and the effort might not be worth it for small savings.
What If Your Employer Reimburses You?
Here’s a twist: if your employer covers your WFH costs, you can’t claim tax relief unless their payment exceeds the actual expenses. For instance, if your employer pays £26 monthly but your costs are £50, you can claim relief on the £24 difference. But if they pay the full £50, you’re covered, and no further relief applies. Always check your payslips to avoid double-dipping, as HMRC cross-checks claims.
Maximising the Work From Home Allowance for Business Owners and Practical Strategies for All
Now, if you’re a business owner or self-employed, you might be thinking the WFH allowance sounds like small fry compared to your expenses. And you’re not wrong—there’s more to this for you than the standard £6-a-week deal employees get. In this part, we’ll unpack how sole traders, limited company directors, and freelancers can claim homeworking costs for the 2025-26 tax year, alongside practical strategies for everyone to squeeze the most out of this relief. We’ll also dig into real-life scenarios and lesser-known tips to keep HMRC happy, all grounded in the latest rules as of June 2025.
How Can Self-Employed People Claim Homeworking Costs?
Let’s kick things off with the self-employed. Unlike employees, you don’t get the flat £6 weekly allowance, but you can claim a portion of your actual household expenses as a business expense. This is called the “use of home as office” deduction, and it’s a game-changer if you’re disciplined about record-keeping. For 2025-26, HMRC offers two ways to calculate this:
Simplified Expenses: A flat rate based on the hours you work from home. For example:
25–50 hours per month: £10 per month (£120 per year).
51–100 hours per month: £18 per month (£216 per year).
101+ hours per month: £26 per month (£312 per year). This is ideal if you hate paperwork, but it might not reflect your true costs.
Actual Costs: Calculate the proportion of your home used as an office and apply that to your utility bills, mortgage interest (not capital repayments), or rent. For instance, if your office is one of five rooms, you claim 20% of eligible costs.
Take Catrin, a freelance web developer from Newport. She works 120 hours monthly from her spare room (one of six rooms in her house). Her annual costs include £1,200 for utilities and £3,600 in mortgage interest. Using actual costs, she claims (1/6) × (£1,200 + £3,600) = £800. As a basic-rate taxpayer, this saves her £800 × 20% = £160 in tax. If she’d used simplified expenses, she’d only get £312, saving £62.40. The lesson? Crunch the numbers to see which method pays off.
Here’s a comparison table for clarity:
Method | Annual Claim (£) | Tax Saving (20%) (£) | Tax Saving (40%) (£) | Pros | Cons |
Simplified (£26/month) | 312 | 62.40 | 124.80 | No receipts needed | May understate actual costs |
Actual (e.g., 20%) | 800 | 160.00 | 320.00 | Reflects true expenses | Requires detailed records |
Can Limited Company Directors Claim WFH Costs?
Now, here’s a question I hear a lot: what about directors of limited companies? If you run your own firm and work from home, you’ve got options, but it’s a bit of a maze. For 2025-26, you can:
Claim the £6 weekly allowance as an employee of your company, paid tax-free. Your company claims this as a business expense, reducing its corporation tax.
Reimburse actual costs through your company, but you’ll need a formal agreement (e.g., a rental agreement between you and your company for office space). For example, Dafydd, a director in Wrexham, charges his company £50 monthly for his home office, backed by a rental agreement. His company deducts this from its taxable profits, saving £50 × 25% = £12.50 in corporation tax monthly.
Be careful! HMRC scrutinises director claims to ensure they’re not just funneling personal expenses through the business. Always keep records like utility bills or a signed agreement to avoid a tax investigation.
What Other Expenses Can You Claim When Working From Home?
So, the question is: what else can you chuck into your WFH claim? Whether you’re employed or self-employed, there’s more than just utilities. Here’s what’s up for grabs in 2025-26:
Equipment: If you buy a desk, chair, or computer for work, you can claim the cost (self-employed) or get tax relief (employees) if your employer doesn’t cover it. For example, Rhys, a Manchester-based accountant, claimed a £500 ergonomic chair as a self-employed expense, saving £100 in tax.
Broadband: A portion of your internet bill if it’s essential for work. Self-employed folks can claim a percentage; employees need proof it’s exclusively for work.
Phone Calls: Business-related calls or a portion of your mobile bill if you’re self-employed.
Stationery and Supplies: Pens, paper, or printer ink used for work.
But don’t get greedy—HMRC rejects claims for personal expenses like your Netflix subscription or the entire rent payment.
How Can You Prove Your Costs to HMRC?
None of us is a tax expert, but keeping HMRC happy is easier than you think. For employees claiming above £312 or self-employed using actual costs, you need:
Utility Bills: Compare bills before and after WFH to show increased usage.
Floor Plan or Photos: Prove the proportion of your home used as an office.
Work Schedule: Log hours spent working from home, especially for simplified expenses.
Receipts: Keep them for equipment or supplies.
For example, Llinos, a yoga instructor from Caernarfon, was audited in 2024. Her detailed spreadsheet of electricity usage and a photo of her home studio saved her claim of £600 annually. Invest in a simple spreadsheet or app like QuickBooks to track expenses—it’s worth the effort.
What Are the Pitfalls to Avoid?
Now, it shouldn’t surprise you that HMRC loves catching mistakes. Here are common traps for 2025-26:
Overclaiming: Don’t claim 100% of your broadband if you also stream movies. Stick to work-related usage.
Double-Dipping: If your employer pays the £6 allowance, you can’t claim it again as tax relief.
No Records: Without evidence, HMRC can disallow your claim and demand back taxes plus penalties.
Mixing Personal and Business: Directors, ensure your company’s claims are clearly work-related.
In 2023, Owain, a Cardiff-based consultant, lost a £1,000 claim because he didn’t separate personal and business utility costs. Learn from his mistake—clarity is king.
How Can You Maximise Your Savings?
Now consider this: if you’re strategic, you can boost your WFH savings. Try these tips:
Compare Methods: Self-employed folks, calculate both simplified and actual costs to pick the higher deduction.
Backdate Claims: Employees, check if you missed claims from 2020-21 or 2021-22 (deadline April 2026).
Negotiate with Employers: Ask your boss to pay the £6 allowance tax-free instead of claiming relief yourself.
Invest in Efficiency: Use energy-saving bulbs or insulate your home office to lower costs, making claims easier to justify.
For instance, Eluned, a Liverpool-based copywriter, switched to actual costs in 2024-25, claiming £900 annually instead of £312, saving £180 as a basic-rate taxpayer. She also backdated two years, pocketing an extra £360.
What If You’re Hybrid Working?
Here’s a curveball: hybrid workers are in a grey area. If your employer requires you to WFH part-time (e.g., two days a week), you can claim the full £6 weekly allowance if eligible. But if it’s optional, you’re out of luck. In 2024, Anwen, a Leeds-based HR manager, successfully claimed £312 because her contract mandated three WFH days weekly. Check your contract or speak to HR to clarify your status.
Key Takeaways for Mastering the Work From Home Allowance in 2025-26
Now, let’s wrap this up with the essentials you need to know about the Work From Home (WFH) allowance for the 2025-26 tax year. Whether you’re an employee juggling Zoom calls from your living room or a business owner running the show from your home office, these points will keep you on the right side of HMRC while maximising your savings. Below, I’ve distilled the most critical insights into a concise list, each point designed to help you navigate the rules and make the most of what’s available. Let’s get to it.
Summary of the Most Important Points
The WFH allowance lets employees claim £6 per week (£312 annually) tax-free to cover extra costs like heating or electricity, as per HMRC’s 2025-26 guidelines.
Employees qualify only if their job requires working from home, not if it’s a choice or part of hybrid working, with strict eligibility enforced post-COVID.
Tax savings depend on your income tax rate: £62.40 for basic-rate (20%), £124.80 for higher-rate (40%), and £140.40 for additional-rate (45%) taxpayers on the standard £312 claim.
Employees can claim relief directly via HMRC’s online service or P87 form, with the option to backdate claims up to four years, including 2020-21 and 2021-22 until April 2026.
Self-employed individuals can claim “use of home as office” expenses using simplified rates (£120–£312 annually) or actual costs, which could yield higher deductions with proper records.
Limited company directors can claim the £6 weekly allowance or reimburse actual costs through their company, but need formal agreements to avoid HMRC scrutiny.
Additional claimable expenses include equipment, broadband, and phone costs, but personal expenses like rent or streaming services are not allowed.
Robust record-keeping, such as utility bills and work schedules, is essential for claims above £312 or for self-employed actual cost deductions to pass HMRC audits.
Common pitfalls include overclaiming, double-dipping, or failing to separate personal and business expenses, which can lead to rejected claims or penalties.
Maximise savings by comparing simplified vs. actual cost methods, negotiating employer payments, or investing in energy-efficient home office setups.
FAQs
1. Q: Can you claim the Work From Home allowance as a part-time employee this tax year?A: Yes, part-time employees can claim the £6 weekly allowance if their job requires homeworking and they meet HMRC’s criteria, like performing substantive duties at home. The allowance is the same regardless of hours worked, provided homeworking is a job necessity.
2. Q: How does claiming the Work From Home allowance affect your tax code in 2025-26?
A: HMRC adjusts your tax code to increase tax-free income by £312 annually, spreading relief across payslips. For example, a basic-rate taxpayer’s code might shift from 1257L to 1313L, reflecting a £62.40 yearly saving.
3. Q: Can you claim the Work From Home allowance if you rent your home?
A: Yes, renters can claim the £6 weekly allowance if required to work from home. Self-employed renters can claim a proportion of rent as “use of home as office” expenses, based on the space used for work.
4. Q: What happens if HMRC rejects your Work From Home allowance claim in 2025-26?
A: You’ll receive a notice explaining the rejection, often due to ineligibility or lack of evidence. You may need to repay any relief received, and you can appeal within 30 days with additional documentation.
5. Q: Can you claim the Work From Home allowance for multiple jobs this tax year?
A: Yes, if required to work from home for multiple jobs meeting HMRC criteria, you can claim £6 per week per employer. Each claim is processed separately, adjusting the tax code for each job.
6. Q: Are there penalties for overclaiming the Work From Home allowance?
A: Overclaiming without evidence can lead to HMRC disallowing the claim, requiring repayment plus interest. Severe cases may incur penalties up to 30% of the overclaimed amount for negligence.
7. Q: Can you claim the Work From Home allowance on a zero-hours contract in 2025-26?
A: Yes, zero-hours workers can claim the £6 weekly allowance if their employer mandates homeworking and they incur extra costs. You must prove the arrangement is formal, not optional.
8. Q: How does the Work From Home allowance work for couples sharing a home office this tax year?
A: Each eligible person can claim the £6 weekly allowance if required to work from home. Self-employed couples must split costs fairly, like utilities, to avoid double-claiming expenses.
9. Q: Can you claim the Work From Home allowance if you rent office space elsewhere?
A: If you primarily work from home, you can claim “use of home as office” expenses, even if you occasionally use rented office space. You can’t claim home expenses for time spent at the external office.
10. Q: What is the deadline for claiming the Work From Home allowance for 2025-26?
A: Claims for 2025-26 must be submitted by April 5, 2030, as HMRC allows claims for the current and previous four tax years. Use HMRC’s online service or Self-Assessment tax return.
11. Q: Can you claim the Work From Home allowance while living in a shared house?
A: Yes, employees in shared houses can claim the £6 weekly allowance if required to work from home. Self-employed individuals can claim a proportion of household expenses based on workspace usage.
12. Q: How does HMRC verify Work From Home allowance claims in 2025-26?
A: HMRC may request proof like contracts, utility bills, or a breakdown of home office usage. For claims above £312, detailed records of increased work-related costs are required, and audits may occur.
13. Q: Can you claim the Work From Home allowance if your employer provides equipment?
A: Yes, the £6 weekly allowance covers utilities, not equipment, so employer-provided items don’t affect it. For actual costs, exclude employer-provided equipment to avoid double-claiming.
14. Q: Is the Work From Home allowance available for remote workers living outside the UK?
A: No, the allowance is for UK taxpayers only. If you live abroad but are subject to UK income tax, you can’t claim unless your home is in the UK.
15. Q: Can you claim the Work From Home allowance as a contractor through an umbrella company in 2025-26?
A: Yes, contractors under umbrella companies can claim the £6 weekly allowance if their role requires homeworking. The umbrella company may process it tax-free, or you can claim via HMRC.
16. Q: How does the Work From Home allowance affect National Insurance contributions?A: The allowance doesn’t directly impact National Insurance, as it’s an income tax relief. Self-employed individuals claiming actual costs may lower taxable profits, potentially reducing Class 4 NICs.
17. Q: Can you claim the Work From Home allowance for a garden office this tax year?
A: Yes, employees can claim the £6 weekly allowance if required to work from a garden office. Self-employed individuals can claim proportional costs, like electricity, if the space is used exclusively for business.
18. Q: Can you claim the Work From Home allowance with a hybrid working policy in 2025-26?
A: Only if your contract mandates specific homeworking days and you incur extra costs. Optional hybrid working for convenience makes you ineligible, as homeworking must be a job necessity.
19. Q: What records should you keep for Work From Home allowance claims?
A: No records are needed for the £6 weekly allowance. For higher claims, keep utility bills, a floor plan, work schedules, and receipts for equipment to justify costs to HMRC.
20. Q: Can you claim the Work From Home allowance as a new employee this tax year?
A: Yes, new employees can claim the £6 weekly allowance from the start of employment if their role requires homeworking. Submit claims via HMRC’s online service with a Government Gateway ID.
About the Author
Mr. Maz Zaheer, FCA, AFA, MAAT, MBA, is the CEO and Chief Accountant of My Tax Accountant and Total Tax Accountants—two of the UK’s leading tax advisory firms. With over 14 years of hands-on experience in UK taxation, Maz is a seasoned expert in advising individuals, SMEs, and corporations on complex tax matters. A Fellow Chartered Accountant and a prolific tax writer, he is widely respected for simplifying intricate tax concepts through his popular articles. His professional insights empower UK taxpayers to navigate their financial obligations with clarity and confidence.
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