If you run a small business with staff who work from home for part of the week, expect some awkward questions in the coming months.
From 6 April, HMRC is scrapping the homeworking tax relief that has been available to employees since 2011, and many of your team may not yet realise it is going.
The relief, which was worth £6 a week and could be claimed without receipts, allowed employees who were required to work from home to offset a small amount against their income tax. For basic-rate taxpayers that meant a saving of around £62 a year; for higher-rate taxpayers, roughly £124. It was not a fortune, but it was simple to claim and widely taken up, particularly after the pandemic normalised remote working.
The Treasury’s reasoning is blunt. Officials say that more than half of all claims fail verification checks, suggesting that large numbers of people have been claiming the relief despite not meeting the qualifying conditions. By removing the entitlement entirely, HMRC expects to claw back around £30 million a year, a modest sum in Whitehall terms but one that tells a story about the scale of non-compliance.
For small employers, the direct impact is limited. This was always a tax relief claimed by individual employees on their personal returns, not a cost borne by businesses. But the knock-on effects are worth thinking about.
Staff who have been quietly pocketing the relief may look to their employer to make up the difference, particularly if hybrid working was the company’s decision rather than the employee’s preference. Some may push for a formal homeworking allowance or ask for expenses to be reimbursed directly, heating, broadband, the cost of a decent desk chair.
Employers are not obliged to provide any of this, but in a tight labour market where retention matters, ignoring the conversation entirely is a risk. A number of larger firms already pay a flat-rate homeworking allowance as part of their benefits package. For smaller businesses without deep pockets, the smarter move may be to review what is already being provided informally and decide whether to formalise it.
There is also a communication point. If your employment contracts or staff handbook reference the HMRC relief as part of the rationale for hybrid working arrangements, those documents may need a quiet update.
The change is relatively small in financial terms, but it lands at a moment when many employees already feel squeezed. Small businesses that get ahead of the conversation, rather than waiting for the first confused payslip query, will handle the transition more smoothly.
