Homeworking Tax Relief in the UK – HMRC Warns of Risks of Incorrect Claims
- TBA
- 3 days ago
- 4 min read
Since 2019, the UK has been undergoing a ‘workplace revolution’ driven by the rise of the four-day week.
Following successful trials, more than 420 companies have now formally adopted the policy while pledging not to cut salaries. According to data from the Office for National Statistics (ONS), around 1.4 million people were working a full four-day week between October and December 2024.
With remote and hybrid working now a widespread trend, tax issues for homeworking employees are increasingly in focus. HMRC has recently clarified that anyone incorrectly claiming tax relief for working from home when they are not eligible could face a substantial repayment bill.
Tax relief for remote working
Official figures show that more than a quarter of UK adults continue to work from home for at least part of the week.
Under UK tax law, employees who cannot perform their role in an office can claim relief for additional household costs such as business phone calls and heating. Basic rate taxpayers can claim a flat allowance of £6 per week, or deduct the actual costs incurred.
However, HMRC stresses that choosing to work from home for personal convenience does not qualify. Incorrect claims may result in taxpayers owing HMRC hundreds of pounds. Employees are also advised not to rely on third-party companies advertising quick refunds for homeworking tax relief.
When homeworking tax relief applies
Tax relief for working from home only applies in the following circumstances:
When an employer does not provide office facilities, and the employee is required to work from home.
When the nature of the role makes homeworking essential.
For example, a basic rate taxpayer claiming the £6 weekly allowance saves £1.20 in tax per week, or around £62.40 per year. Higher-rate and additional-rate taxpayers can save £124.80 and between £135 and £140.40 respectively. Claims must be supported by evidence such as bills and receipts, alongside confirmation that homeworking is mandatory.
During the COVID-19 pandemic, over 800,000 employees successfully claimed this allowance as they were required to vacate office premises. While the benefit was modest, it provided valuable relief against higher household costs such as energy and heating.
Backdated claims
A notable feature of the scheme is that it can be backdated. HMRC allows eligible employees to make retrospective claims for the current tax year and the previous four tax years.
For example, if an employee qualified during the 2020/21 and 2021/22 tax years but failed to claim, they may still be able to secure up to £280 in relief, provided sufficient evidence is supplied. Claims must demonstrate that homeworking was mandatory, with detailed household bills and receipts to substantiate costs.
HMRC generally adjusts tax codes so that the relief is spread across payslips, although backdated claims may be issued via cheque.
It is important to note that applications for 2020/21 tax year costs closed on 5 April 2025. Rules have been significantly tightened since 2022.
Different rules for the self-employed
Self-employed individuals cannot use HMRC’s flat £6 per week homeworking relief.
Instead, they must claim expenses through the Self Assessment system, proportionate to the business use of their home. Allowable expenses can include rent or mortgage interest, utilities, insurance, and repairs.
As with other deductible business expenses, claims must be carefully calculated, fully documented, and justifiable as business-related. Because this process can be complex, self-employed taxpayers are advised to seek guidance from a qualified tax adviser to ensure accurate claims and avoid rejection.
Key Self Assessment deadlines for the 2024/25 tax year
5 October 2025: Deadline to register if you are a new taxpayer (e.g. first year self-employed or with untaxed income).
31 October 2025: Deadline to submit paper tax returns. Late submissions incur penalties.
30 December 2025: Deadline for online returns if you wish tax due to be collected automatically via PAYE.
31 January 2026: Critical deadline for online Self Assessment filing and payment of tax due, including any first payment on account. Late filing or payment will result in fines and interest.
Some advice from TB Accountants
Overall, the UK’s approach to homeworking tax relief has become more restrictive since the pandemic. The relief remains a useful benefit for employees who are genuinely required to work from home, but HMRC is vigilant about preventing misuse.
For employees, there are two main routes to apply: HMRC’s online tool or form P87, which is often used when expenses exceed £2,500 or relate to multiple employments. Those who already complete Self Assessment should include the claim within their annual return.
Whether you are an employee or self-employed, the key is to understand whether your circumstances genuinely qualify, retain full documentation, and avoid misleading advertisements. This way, you can claim legitimately and safeguard your tax position.
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