Glossary · UK
What is Homeworking Allowance?
A tax-free payment employers can make to cover an employee's additional household costs from working at home.
Full Definition
The homeworking allowance lets an employer pay an employee a modest flat weekly amount tax and National Insurance free to cover extra household costs — such as heating and electricity — that arise from working from home under a formal homeworking arrangement, without needing receipts. Employees who are not reimbursed by their employer, and whose employer requires them to work from home, may instead be able to claim tax relief directly from HMRC on an equivalent amount, though eligibility rules have tightened since the pandemic-era relaxations ended.
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Disclaimer: Definitions are for guidance only. For decisions about your tax, savings, property or pension situation, always consult a qualified professional or refer to gov.uk.