Are Hybrid Workers Being Taxed Differently After COVID

How hybrid working changed the UK workplace

Before the pandemic, home working was often seen as a niche benefit. COVID-19 forced companies to adopt remote working, and many have since kept a hybrid model. Employees now split their time between home and office, using flexible schedules to balance work and life.

This shift has blurred the line between business and personal expenses, particularly when it comes to travel, equipment, and home office costs. Many workers have wondered whether this also means a change in how HMRC taxes them.

The short answer is that most hybrid workers are taxed the same as before COVID, but certain allowances and expense rules have evolved.

Are hybrid workers on a different tax code?

Hybrid working does not automatically change your tax code. Your income tax is still deducted through PAYE based on your salary, benefits, and personal allowance.

If you only have one employer and no major changes to your income, your tax code is likely the standard 1257L. However, changes in working arrangements can sometimes lead to adjustments. For example:

If your employer provides new benefits such as a home office allowance, your tax code might be updated to reflect them.

If you now claim expenses that reduce taxable income, HMRC may adjust your code accordingly.

You can check your current tax code through your HMRC Personal Tax Account to make sure it’s correct.

What tax reliefs are available for home working

During the pandemic, HMRC introduced a temporary homeworking tax relief for employees who had to work from home due to COVID-19 restrictions. This allowed workers to claim up to £6 per week tax-free to cover additional costs like heating, lighting, and internet use.

That specific relief ended in April 2022. However, you can still claim tax relief if:

You are required to work from home by your employer, and

You have increased household expenses as a result.

You cannot claim relief simply because you choose to work from home part of the time. For most hybrid workers, home working is now seen as optional rather than mandatory, which means these claims are often no longer valid.

Can hybrid workers still claim travel expenses?

Travel expenses remain one of the most misunderstood areas for hybrid workers. HMRC’s position is that travel between your home and a permanent workplace is considered ordinary commuting and is not tax deductible.

However, if you travel to a temporary workplace or are required to work in multiple locations, you may be able to claim tax relief for those journeys.

For example:

If you usually work from home but occasionally travel to a client site or a temporary project office, that travel may qualify as business mileage.

If you split your time between two permanent offices, your employer should decide which is your main workplace for tax purposes.

Employers who reimburse travel costs incorrectly could risk providing a taxable benefit in kind, so it’s important that both employees and payroll teams understand the rules.

Are employer-provided home office items taxable?

Many employers now supply hybrid workers with equipment such as laptops, chairs, or monitors to support home working. In most cases, these are not taxable benefits, provided they are used mainly for work and remain company property.

However, if your employer gives you equipment to keep permanently for personal use, that may be treated as a benefit in kind and could appear on your P11D.

If you buy your own equipment, you can only claim tax relief if the item is essential for work and not used for personal reasons. HMRC’s test for “wholly, exclusively and necessarily” for work purposes remains strict.

What about reimbursed expenses?

Employers can reimburse reasonable homeworking expenses tax-free if employees are required to work from home. These can include:

A fixed weekly allowance (up to £6 per week without receipts)

Actual additional costs such as broadband, electricity, or heating if supported by evidence

If hybrid working is optional, any payments made by your employer for homeworking costs may count as taxable income. Employers often handle this by adding the payment to gross salary and applying PAYE deductions.

How hybrid working affects benefits and perks

Some workplace benefits have changed as companies adapt to flexible working. For example:

Company cars: If you rarely travel for work and mostly work from home, your benefit-in-kind value could still apply, as it’s based on vehicle availability, not usage.

Season ticket loans: These are still tax-free if repaid within 12 months and under £10,000, but fewer hybrid workers now use them.

Flexible working allowances: Some companies offer one-off home office grants or wellbeing stipends. These are often taxable unless they meet HMRC’s specific exemption criteria.

Employers should report any new or non-standard benefits through payroll or on annual P11D forms.

Do hybrid workers still qualify for flat-rate expenses?

Certain professions are entitled to flat-rate expense deductions, covering costs like tools, uniforms, or equipment. These allowances are not affected by hybrid working.

For example, electricians, nurses, and engineers can still claim their fixed deductions as usual, even if they now work partly from home.

How hybrid working affects tax residency and cross-border employees

An increasing number of hybrid employees now work from overseas part of the time. This can complicate tax residency and create dual tax obligations.

If you spend long periods working abroad, your UK tax liability may change depending on the number of days spent outside the country and any tax treaties in place. Employers should seek professional advice when allowing employees to work internationally, even temporarily.

For employees, it’s important to track working days in each country and check whether your PAYE deductions still apply.

What employers need to do differently

From an employer’s perspective, hybrid working does not change PAYE obligations. Income tax and National Insurance must still be deducted as normal.

However, employers should review:

Whether any homeworking allowances or equipment reimbursements are taxable

How to classify permanent and temporary workplaces for travel expenses

Payroll systems to ensure benefits and expenses are correctly reported

Employers who fail to treat hybrid arrangements correctly risk unexpected tax liabilities or compliance issues with HMRC.

Practical advice for hybrid workers

To stay on top of your taxes while working flexibly:

Check your payslips regularly for correct tax deductions

Review your tax code through HMRC’s online account

Keep records of work-related expenses and travel

Ask your employer whether any allowances you receive are taxable

Seek professional advice if you work abroad or have multiple employers

Hybrid working gives flexibility, but it also requires employees to be more aware of how their working patterns affect their tax position.

Final thoughts

Hybrid working hasn’t introduced a new tax system, but it has created new scenarios that test old rules. For most employees, tax is still deducted under the standard PAYE system. The key differences lie in expenses, benefits, and allowances rather than tax rates or codes.

Staying informed about what can and cannot be claimed helps you avoid surprises and ensures you’re not paying more tax than you should. As hybrid work continues to evolve, it’s likely HMRC will issue further clarification, but for now, the fundamentals of PAYE and expense reporting remain the same.