Millions of people working from home in England will see a significant financial change next April following Chancellor Rachel Reeves' first budget announcement.
The End of WFH Tax Relief
Under new measures revealed in the Labour government's budget, the ability for employees to claim tax relief on additional home working costs will be completely removed from April next year. This marks the end of a valuable perk that became particularly important during the COVID-19 pandemic, when millions of remote workers benefited from a flat £6 weekly allowance to cover extra expenses.
The change means that from next spring, home workers will no longer be able to claim back the cost of additional heating, electricity, or broadband usage through tax relief. Only employers will retain the ability to reimburse work-from-home costs tax-free, shifting the responsibility entirely away from individual claims.
Chancellor's Justification and Budget Context
Chancellor Reeves defended her measures, stating they would put public finances on a sustainable path while building what she described as "a fairer, a stronger, a more secure Britain". Her approach focuses on tackling inflation and investing in large-scale infrastructure projects.
The budget also created £22 billion of fiscal headroom for the Treasury, designed to stave off future speculation about missing fiscal rules and to reduce government borrowing costs. "I said I would cut the cost of living and I meant it. This budget will bring down inflation and provide immediate relief for families," Reeves told Parliament.
Political Reactions and Implications
Within Labour ranks, the budget received mixed responses. Some ministers and MPs praised it as a shift leftwards, with one senior strategist noting: "This shows we are a full-blooded Labour government. Wealthiest pay more and we protect those with greatest need." They suggested the measures would buy Prime Minister Keir Starmer and Chancellor Reeves time against potential leadership challenges.
However, other ministers expressed disappointment with the approach. One told the Guardian: "This does nothing to move the fundamentals. Yet again there was an opportunity for boldness which has led to nothing much." Another warned that while the budget might provide short-term relief with backbenchers and financial markets, it delays what they see as an inevitable reckoning with the country's economic challenges.
The removal of WFH tax relief represents one of the more immediate changes affecting household finances, coming into effect at the start of the new tax year in April 2026.
