They say what you win on the swings, you lose on the roundabouts. It certainly seems to be true of the latest changes to the rules on tax relief for employees.
The good news
There are some new tax exemptions for workplace benefits applying from 6 April 2026. The rules change so that there will be exemptions from tax where employers:
- reimburse expenses relating to accommodation, or supplies or services used in the performance of employment duties (such as homeworking equipment)
- reimburse or provide flu vaccinations directly
- reimburse employees for the cost of eye tests and corrective appliances.
Previously, exemptions only applied where employers provided benefits directly, or provided a non-cash voucher to the employee so that they could pay for them. If the employee met the cost and was then reimbursed, no Income Tax or National Insurance relief was available. The new rules look to level up the treatment for tax purposes.
And the not-so-good news
On the other hand, tax relief is being scrapped for home working expenses in cases where employees are not reimbursed by their employer. This also applies from 6 April 2026.
Previously, it has been possible for employees who were not reimbursed by their employers, to claim relief from HMRC for the actual expenses incurred; or a flat rate, of £6 per week. HMRC, however, has become increasingly concerned that claims for relief have been submitted which did not comply with the rules, and this route is being withdrawn.
It is still possible for employers to choose to reimburse employees, and do so without deduction of Income Tax and National Insurance. If they don’t do so, however, it will no longer be possible for employees to claim tax relief themselves, directly from HMRC, as in the past.
Here to help
The rules on employee benefits are complex, and we are here to help. Please talk to us at any time to discuss the best way to create a tax efficient package that will help you attract the talent you need to run your business.
