Home broadband paid for by an employer is tax free if the employer provides it solely so the employee can work and private use is not significant, or if it reimburses a new connection the employee had to take out to work from home. From 6 April 2026 a reimbursement can also be exempt under section 316ZA. Contributing to a household connection the employee already had is usually taxable.

Why does it matter whose name is on the contract?

Three different exemptions can apply, and which one is available depends on who contracts with the provider. HMRC’s Employment Income Manual at EIM21613 explains that where the employee contracts for a service and the employer either reimburses them or pays the provider on their behalf, the main exemption for work equipment and services in section 316 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) does not apply. A reimbursement is taxable under section 70, and a payment direct to the provider meets the employee’s own debt and is taxable under section 62. From 6 April 2026 the new section 316ZA can exempt both, if its conditions are met.

So the first question for any broadband arrangement is: who is the customer? The answer decides which tests apply and, if the payment is taxable, how it is reported.

When is a connection in the employer’s name tax free?

Section 316 exempts services provided by the employer away from its premises if they are provided solely to enable the employee to do the job and any private use is not significant. EIM21617 applies this to internet access. Where the employer provides home internet solely for work under a package with no separate billing, and no breakdown between work and private use is possible, HMRC accepts that the cost is exempt as long as private use is not significant and does not affect the cost of the package.

“Not significant” is not defined in law. EIM21613 says HMRC should accept the test is met where the employer’s policy on private use is clearly stated to employees, for example in contracts or a signed acknowledgement, and any decision not to recover the cost of private use is commercial rather than a reward. Employers do not need to log each instance of private use. EIM21617 adds that a telephone line used to carry the connection is a separate matter, treated according to who contracted for it; EIM21615 sets the conditions for a home line, including a clear business need and controls on private calls.

What changed for reimbursements from 6 April 2026?

Section 316ZA was inserted by section 20 of Finance Act 2026 for 2026 to 2027 onwards. It exempts the payment or reimbursement of expenses an employee incurs on behalf of the employer for accommodation, supplies or services, if two conditions are met:

Condition A
When the service is first provided, the employer intends it to be used in performing the duties of the employment, and intends any private use by the employee or their family or household not to be significant.
Condition B
Where provision is away from the employer’s premises, the sole purpose is to enable the employee to perform the duties, and what is provided is not an excluded benefit.

EIM21619 explains that the section applies only to payments or reimbursements made on or after 6 April 2026, and that direct provision by the employer remains under section 316. HMRC’s policy paper on expanding workplace benefits relief confirmed a matching Class 1 National Insurance disregard for home working reimbursements, made under section 3(3) of the Social Security Contributions and Benefits Act 1992.

Can the employer pay towards broadband the employee already had?

This is where most claims fail. Section 316A exempts payments for reasonable additional household expenses of an employee who works at home regularly under homeworking arrangements. EIM21617 says a broadband subscription can count if an employee who had not previously subscribed needed one to work from home, but payments to an employee who was already subscribing do not qualify because the cost is not additional.

GOV.UK’s employer guidance on homeworking puts the same rule in three conditions. A reimbursed broadband fee need not be reported or taxed only if a connection was not already available, the employee needs it to work from home, and it is mainly used for business. EIM21617 says section 316ZA may apply to a reimbursement if its conditions are met, but a family connection that existed before the work arrangement, and is used by the whole household, will struggle to meet the sole purpose and intention tests. Our page on equipment provided for home working covers the same exemptions for desks, laptops and chairs.

How is a taxable broadband payment reported?

Arrangement Reporting
Employer’s contract, significant private use Form P11D and Class 1A National Insurance on the cost to the employer
Employee’s contract, employer pays the provider Form P11D for tax and Class 1 National Insurance through payroll, but not PAYE
Employee’s contract, employer reimburses the employee Earnings: PAYE and Class 1 through payroll

The first row comes from GOV.UK’s homeworking guidance, which says equipment, services and supplies provided for both business and private use go on the P11D with Class 1A on the cost. The second and third follow GOV.UK’s guidance on personal bills. HMRC’s guide CWG5 gives the Class 1A rate for 2026 to 2027 as 15%. See benefits in kind and form P11D and Class 1A National Insurance.

Salary sacrifice removes the exemption. GOV.UK’s guidance on office equipment, which lists telephone and internet connections, says that items provided under salary sacrifice are not exempt and the higher of the salary given up and the cost must be reported. See salary sacrifice schemes.

Can the employee claim tax relief instead?

Not from 2026 to 2027. EIM21617 says that from 6 April 2026 unreimbursed additional household expenses no longer qualify for a deduction under section 336. GOV.UK’s guidance on job expenses also says employees cannot claim for things used for both private and business purposes, such as broadband. Before 2026, EIM21617 noted that an unlimited package with no separate billing left no identifiable business cost, so no deduction was due. An employee who wants relief therefore needs the employer to fund the connection within one of the exemptions above. See working from home expenses.

How does this look in practice?

Illustration only. An employer has three homeworkers in 2026 to 2027, each with broadband costing £30 a month.

  1. Employee A works at home full time. The employer contracts for a separate line in its own name for work only, with a written policy permitting incidental personal use. Exempt under section 316.
  2. Employee B had no home broadband and took out a contract in their own name when agreeing to work at home three days a week. The employer reimburses it. Exempt under section 316A, as the connection is additional.
  3. Employee C has had family broadband for years. The employer starts paying half the bill. Taxable: £15 a month goes through payroll with PAYE and Class 1.

What mistakes come up most often?

  • Applying section 316ZA to payments made before 6 April 2026.
  • Paying towards an existing household connection and treating it as a new homeworking cost.
  • Having no written private use policy for a connection the employer provides.
  • Reporting a reimbursement on the P11D instead of putting it through payroll.
  • Offering broadband through salary sacrifice and assuming the exemption still applies.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.