Working From Home Tax Relief 2026/27: Who Qualifies, How to Claim

Overview - what changed after COVID

Working from Home tax relief for employees is governed by Employment Income Manual EIM32760 and the underlying section 336 ITEPA 2003 test that expenses are deductible only if incurred wholly, exclusively and necessarily in the performance of the duties of the employment. The strict statutory test for homeworking has always required either (1) no appropriate facilities at the employer premises, (2) the employee living too far away to attend daily on the employer requirement, or (3) the work itself requiring home-based performance (typically for protected, confidential or specialist work). The strict test substantially excludes voluntary, hybrid or convenience-based homeworking arrangements.

Between 6 April 2020 and 5 April 2022, HMRC operated a temporary easement that relaxed the test substantially: any employee who worked from home for any part of the COVID lockdown or post-lockdown period could claim the full year £312 flat-rate relief (£6 / week x 52 weeks) regardless of whether the strict test would otherwise have been met. The easement was administered through an express microservice on the HMRC Government Gateway, opened in October 2020 and closed in March 2022. Over 4 million employees claimed via the microservice in 2020/21 alone. The easement explicitly ended on 6 April 2022 and the strict EIM32760 test reasserted itself for 2022/23 onwards. HMRC made the rule change clear in a series of notices but the message did not reach many employees who continued homeworking on a voluntary or hybrid basis - HMRC has subsequently rejected substantial volumes of post-2022/23 claims that did not meet the strict test.

The post-2022 position is therefore much tighter than the COVID-era pattern: an employee who chooses to work from home 2 to 3 days per week under a hybrid agreement (where the employer office is available and the employee could attend) does not qualify for the relief. An employee whose employer has no office at all and explicitly requires home-based work qualifies. An employee whose role requires home-based confidential or specialist work qualifies. An employee whose office is too far to attend daily and the employer accepts the homeworking on that basis qualifies. The £6 / week flat-rate scale, the actual-cost apportionment route, and the P87 / Self Assessment claim mechanics all remain the same as during the easement; what changed is the eligibility gate at the front of the process. Self-employed sole traders are unaffected by these changes - the separate BIM47820 simplified-expenses scheme operates throughout regardless of the COVID easement timeline.

Employee eligibility - the strict "required to work from home" test

For 2026/27 the test under EIM32760 requires that the employee meets one of three conditions:

• No appropriate facilities at the employer premises - the employer has no office, no sufficient office capacity, or no functionally appropriate facility for the work required (e.g. a sales team without dedicated sales desks, or a research role where the employer cannot provide a confidential workspace). Documentation: written confirmation from the employer that no facility exists, or evidence of office-capacity constraints (hot-desking ratios above 1.0, full-week booking lists showing unavailable desks).
• Distance from the employer premises - the employee lives too far from the workplace to commute daily on the employer requirement (typically more than 2 hours each way), and the employer accepts the homeworking on the basis of this distance constraint. Documentation: the employment contract or letter confirming the distance-based arrangement, with the locations and travel times specified.
• Nature of the work requires home base - typically applies to protected work (judicial review, legal privileged work), specialist confidential work (research, M&A advisory, certain regulated financial work), or work that requires equipment installed at home (broadcasting, specialist medical imaging interpretation). Documentation: written confirmation from the employer of the work-nature requirement.

Post-COVID hybrid working patterns where the employee has a choice between office and home days (typically 2 office / 3 home or 3 office / 2 home) do not meet the test - the test is whether the employee is required to be at home, not whether the employee chooses to be at home. HMRC has been explicit in subsequent guidance that the existence of a hybrid policy at the employer level does not constitute the "no appropriate facilities" condition unless the employer has functionally reduced office space below the level required for full-time attendance of all staff.

The £6 a week flat-rate scale

Eligible employees can claim the EIM01472 flat-rate scale of £6 per week (£312 per year for a full tax year) without needing to evidence actual additional household costs. The flat rate is intended to cover heating, lighting, water, business calls and the proportion of broadband attributable to work use. The relief value depends on the marginal Income Tax rate:

The £6 / week scale was last reviewed in 2020 when it was raised from £4 / week and has not increased since - despite material energy-cost inflation in 2022 / 2023. The 2026/27 figure remains £6 / week. The flat rate does not need to be reduced for weeks when the employee was on annual leave or sick leave - the full £312 can be claimed if the employee was eligible for the homeworking arrangement during the tax year. Where the eligibility started or ended part-way through the tax year, the claim is pro-rated on a weekly basis.

Actual-cost alternative

Eligible employees can choose to claim actual additional household costs instead of the £6 / week flat rate. The actual-cost route is most worthwhile where the employee dedicates a specific room exclusively to work (allowing apportionment of heating, lighting and council tax on a room-count basis) and has identifiable additional costs such as a dedicated business broadband line. Most employees find the flat rate captures more relief than the time-and-effort cost of evidencing the actual cost route, because the apportionment basis HMRC accepts is restrictive:

• Heating, lighting, electricity, gas - apportioned on the number of rooms used for work as a fraction of total rooms (a 1-of-5-rooms home office gives 20% apportionment), or on the time-used basis where the room has dual personal and business use.
• Broadband - allowable only on identifiable additional cost incurred because of the homeworking (the cost of broadband itself is not allowable because most homes have broadband anyway). Typical business proportion 25% to 40% of total broadband cost.
• Water rates - only allowable where there is a metered business-related increase (rare for office-based homeworking; relevant for hairdressers, beauticians and similar high-water-use home-based businesses but those would typically be self-employed).
• Mortgage interest, rent, insurance, council tax - not allowable for employees. These are capital and accommodation costs the employee would pay regardless of the homeworking. (Self-employed sole traders have a different and more generous treatment under BIM47820.)

The maximum employee claim under the actual-cost route is typically £400 to £900 per year for a dedicated home office in a high-energy-cost period (winter heating-dominated calendar), vs £312 per year on the £6 / week flat rate. The £88 to £588 / year delta is rarely worth the time and documentation cost for basic-rate-band employees but can be worthwhile for higher-rate-band employees with genuinely dedicated home offices.

Self-employed simplified expenses

Self-employed sole traders have a separate and much more generous regime under HMRC BIM47820 - the simplified expenses scheme. The scheme uses fixed monthly flat-rate bands based on the hours of business use of the home per month, deducted from profit before Income Tax and Class 4 NIC:

The simplified scheme does not require evidence of actual costs - the flat rates are HMRC-agreed scales that apply regardless of the actual energy bills. A sole trader in the basic-rate band (20% IT + 6% Class 4 NIC = 26% combined marginal) on the £26 / month top band saves around £81 per year. The simplified scheme covers the apportionment of heating, lighting, electricity, gas, water and other running costs - it does not cover mortgage interest, rent, council tax or business-rates apportionment.

Alternative for self-employed: the actual-cost apportionment route is meaningfully more generous than the equivalent employee route because it allows mortgage interest, council tax and a wider range of running costs to be apportioned on a room-count plus time-used basis. A sole trader with a dedicated home office in a 5-room property pays 1/5 (20%) of mortgage interest, council tax, heating, lighting and insurance as business cost, deductible against profit. This route can be worth £1,000 to £3,000 per year for dedicated-home-office self-employment but requires careful documentation. There is one trap: dedicating a room exclusively to business use (with no personal use whatsoever) triggers Capital Gains Tax exposure on the business-use proportion when you eventually sell the house - Principal Private Residence relief is restricted by the business-use percentage. Most self-employed sole traders avoid this trap by keeping rooms flexibly business-and-personal use, which is consistent with the simplified scheme but limits the actual-cost route to time-used apportionment rather than room-count exclusive apportionment.

How to claim - P87 vs Self Assessment

Two claim routes depending on circumstances:

Form P87 (employees with claims under £2,500 / year)

The standard route for employees claiming expenses under £2,500 per year. Submit online via the HMRC Government Gateway "Claim tax relief for your job expenses" service, or by post using form P87. The submission requires: employer name and PAYE reference, tax years claimed, weeks of homeworking in each tax year, and either the flat-rate £6 / week claim or itemised actual-cost details. HMRC processes the claim and adjusts your tax code to deliver the relief through PAYE going forward for the current year (typically via a 312L-type adjustment that adds the £312 / year to your personal allowance), and issues a refund cheque or bank transfer for prior tax years. Processing time is typically 10 to 12 weeks. Claims can be backdated up to 4 tax years.

Self Assessment (claims over £2,500 / year or already filing)

If you already file Self Assessment for other reasons (self-employment, dividends over £10,000, rental income, savings interest above PSA), include the homeworking expense as an employment expense in the SA102 Employment supplementary pages, box 20 (other expenses). Claims over £2,500 per year must use Self Assessment - you cannot use P87 for amounts above the threshold. The Self Assessment route also applies when the employer reimburses some homeworking costs and you are claiming the difference, where the calculation requires the reimbursement to be reported in box 17 (homeworking expenses received from employer).

Employer reimbursement interaction: if the employer pays £6 / week tax-free (the EIM01472 employer-reimbursement scale, which mirrors the employee claim scale), the employee cannot also claim tax relief on the same £6 / week from HMRC. Where the employer pays less than £6 / week, the employee can claim relief on the difference. Where the employer pays more than £6 / week, the excess is taxable as employment income unless the employee can demonstrate actual costs of the higher amount.

Records to keep

For the flat-rate £6 / week route: minimal records but you should keep (1) a note of the start date of your eligible homeworking and (where relevant) the end date if part-year, (2) the basis for meeting the strict "required to work from home" test - typically a letter or written confirmation from your employer explicitly stating the homeworking is required (rather than chosen), and (3) the number of weeks claimed if it is less than the full tax year.

For the actual-cost route: detailed records are required - copies of utility bills (gas, electricity, broadband, water), council tax bills (for reference only, employees cannot claim council tax), calculation of business-use apportionment basis (number of rooms, hours of use), receipts for incremental costs (business broadband upgrade, dedicated office insurance) and a written rationale for the apportionment percentage. HMRC enquiries on Working from Home claims have increased materially post-COVID as the easement-era over-claiming patterns are unwound - the actual-cost route now requires meaningfully more documentation than during the 2020 to 2022 easement window. HMRC retains the right to enquire into any claim within the standard 5-year record-retention window under the Taxes Management Act 1970.

Related calculators and guides

• Salary calculator - PAYE take-home for any employed homeworker salary with pension salary sacrifice modelling.
• Self-employed calculator - sole-trader profit with simplified-expenses scheme deductions for home-based business use.
• UK tax relief guide - overview of all employment expense reliefs available via P87 / Self Assessment.
• Pension tax relief guide - relief at source vs net pay arrangement comparison.
• Mileage tax relief calculator - 55p / mile relief for the first 10,000 business miles where employees use their own car for work.
• UK mileage allowance guide - HMRC Approved Mileage Allowance Payments (AMAP) scale rates for business use of own vehicle.
• Personal Allowance guide - the £12,570 tax-free band that the £312 / year working-from-home claim effectively expands.