Attention all home workers! Big changes are coming this April that you need to know about. The Chancellor has announced in the latest Budget that tax relief for those required to work from home will be ending soon. Previously, if you had no office and had to work from home, you could claim a flat rate of £6 per week to cover extra costs like energy and broadband. But come April 2026, this relief will be no more!
Remember when the pandemic hit, and many of us found ourselves working from the dining table? Back then, if you worked from home even for one day, you could claim tax relief. However, in 2022, the rules tightened, and now, if you’re choosing hybrid work, there’s no relief for you. But fret not, employers can still chip in towards your home working expenses without any tax implications.
In other news, the Chancellor also froze tax thresholds for another three years. So, your income tax personal allowance stays at £12,570 until 2030-31. This means more of us might end up in higher tax brackets as our earnings rise—a sneaky move known as ‘fiscal drag’ or a ‘stealth tax’.
Here’s how it works: earn above the personal allowance and you’ll pay 20% tax. Hit £50,270 and you’ll face 40%, while over £125,140 takes you to a hefty 45%. The same threshold of £12,570 also applies for starting National Insurance contributions at 8%, dropping to 2% above £50,270.
These changes could mean more pressure on your wallet, so stay informed and plan accordingly. Keep an eye on how these updates might impact your finances and consider talking to a financial advisor for personalised advice.
What do you think about these changes? Let us know your thoughts!