4. Homeworking Costs, Student Loans and Everyday Changes You’ll Actually Feel

Homeworking costs: no more personal deduction

From April 2026, the ability for employees to claim income tax relief on non-reimbursed homeworking costs disappears.

For small businesses that went hybrid or fully remote, this is important:

  • Employees who currently claim a tax deduction personally won’t be able to.

If you still want them to be cost-neutral, you’ll need to reimburse under the employer rules instead

Student loan thresholds frozen

Plan 2 student loan thresholds are being frozen. As wages rise, more graduates pay back more, faster.

If you employ graduates, this:

  • Reduces their take-home pay over time
  • May affect salary negotiations and expectations

Why this matters to you as an employer

This is not just a payroll admin detail. It affects:

  • Staff morale (“my take-home pay is shrinking”)
  • How competitive your overall package feels
  • The real cost of homeworking for your team

Practical steps for small employers

  • Review your homeworking policy
    Decide whether you will offer a flat-rate homeworking allowance, reimburse actual costs, or make office attendance the default.
  • Communicate clearly with staff
    Explain that the personal tax relief is ending, and what (if anything) you’ll do as an employer.
  • Use benefits to support graduates
    Consider financial education sessions or tools that help younger staff understand payslips, loans and tax.
  • Build these changes into forecasting
    While the numbers per head are small, across a team they add up. Factor any new allowances into your staffing budget.

How can we help at MDH

Book a quick tax chat with me, no strings attached. We’ll have a look at your situation and spot opportunities you might be missing. And as a thank-you, I’ll send you a free copy of our book 75 Ways to Pay Less Tax, packed with simple, practical tips you can put to work straight away. Let’s make sure your money’s working smarter, not harder.

Michael Hemme

Book your Tax Trajectory Review!

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