Equipment provided for home working

Desks, chairs, laptops, phones and stationery that an employer provides for an employee to work at home are tax free if they are provided solely so the employee can do the job and any private use is not significant. From 6 April 2026 the same exemption also covers the employer reimbursing items the employee buys on the employer’s behalf, under the new section 316ZA. Broadband is exempt only in narrower circumstances, and equipment the employee keeps can become a taxable benefit.

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What is the basic exemption for equipment at home?

Section 316 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) exempts accommodation, supplies and services used in performing the duties of the employment. HMRC’s Employment Income Manual at EIM21611 explains that where they are provided other than on the employer’s premises, for example to a homeworker, there is no tax charge if they are:

provided for the sole purpose of enabling the employee to perform the duties of the employment;
actually used in performing those duties; and
any use for private purposes is not significant.

EIM21611 gives examples: office furniture and equipment such as desks and filing cabinets, stationery and normal office supplies, computer equipment, and in some circumstances a home telephone line or internet connection. GOV.UK’s employer guidance on homeworking confirms that you do not have to report or pay tax on these where they are used only for business, or where private use is insignificant, and that this includes laptops, tablets and computers.

Certain items can never qualify when provided away from the employer’s premises. Under section 316(5), as set out at EIM21612, these are motor vehicles, boats, aircraft, and any extension, conversion or alteration of living accommodation or the construction of a building next to the home and enjoyed with it. A garden office built by the employer is therefore outside the exemption.

What does “not significant” private use mean?

The legislation does not define it. 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 desire to reward the employee. Employers are not expected to log every instance of private use.

HMRC’s own example is a computer provided because the employee needs one to work at home or while travelling. EIM21613 says it is highly unlikely that private use will be significant compared with the business need, so section 316 applies. The GOV.UK guidance says you decide how much private use you allow, but you must state it clearly.

Two related conditions cause problems. Use that is at the same time for work and for private purposes counts as private use. And under section 316(4), explained at EIM21614, if the employer has a mixed motive, partly to let the employee use the item privately, the exemption is lost.

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What changed on 6 April 2026?

Before 2026 to 2027, the exemption only applied where the employer provided the item directly. EIM21613 explains that if an employee bought something and the employer reimbursed them, the reimbursement was taxable under section 70 ITEPA, and paying the supplier for the employee’s own contract was taxable under section 62.

Finance Act 2026 inserted section 316ZA. It exempts the payment or reimbursement of expenses an employee incurs on behalf of the employer on accommodation, supplies or services. EIM21619 sets out two conditions:

Condition A: When the items are first provided, the employer intends them to be used in performing the duties of the employment, and intends any private use by the employee, their family or household not to be significant.
Condition B: Where provision is not on the employer’s premises, the sole purpose must be to enable the employee to do the job, and the item must not be an excluded benefit.

HMRC’s April 2026 Employer Bulletin says that where an employer reimburses eligible homeworking equipment, no income tax or National Insurance charge arises, and that the exemption applies automatically if the conditions are met, with no claim or approval needed. The policy paper confirmed a new Class 1 National Insurance disregard alongside the income tax change.

Is broadband tax free?

Broadband has its own rules. EIM21617 says that where the employer provides internet access in the employee’s home solely for work and private use is not significant, the cost is exempt under section 316, even where the package has unlimited use and no breakdown between work and private calls is possible. From 6 April 2026, section 316ZA may cover reimbursement on the same conditions.

Where the employee already had broadband and the employer contributes to the bill, it is much harder to argue the sole purpose test is met. The GOV.UK guidance limits tax free reimbursement of a broadband fee to cases where a connection was not already available, the employee needs it to work from home, and it is mainly used for business. EIM21617 makes the same point about section 316A: a new subscription taken out to work from home can be a reasonable additional cost, but an existing one is not additional.

How do phones and household costs fit in?

Mobile phones are covered by a separate exemption in section 319. GOV.UK says you do not need to pay tax or restrict private use on mobile phones and SIM cards, limited to one per employee. A home landline is more restricted: EIM21615 says the exemption may apply where there is a clear business need, the employer controls the cost of private calls and has no intention of rewarding the employee.

Heating, lighting and similar costs are not equipment. Employers can pay up to £6 a week, or £26 a month for monthly paid staff, tax free under section 316A where the employee works at home regularly under arrangements with the employer, according to GOV.UK and EIM01476. From 6 April 2026 employees can no longer claim tax relief themselves for unreimbursed household costs, as HMRC’s Employer Bulletin and EIM01472 confirm. Our page on working from home expenses covers this in more detail.

What happens if the employee keeps the equipment?

EIM21611 states there is no tax charge when the equipment is returned, as long as ownership is not transferred. If ownership passes to the employee, it becomes a benefit. For computers that have been used, EIM21655 says the taxable amount is the lower of the original cost and the market value at transfer, less anything the employee pays. Equipment with significant private use that is lent but not transferred is valued under section 205: EIM21885 sets the annual cost at 20% of the market value when first provided as a benefit, plus related expenses.

The GOV.UK guidance gives a specific rule for equipment provided during the coronavirus pandemic: if you let the employee keep it, record it as a benefit at its market value when you agreed they could keep it, less any amount the employee paid. Taxable items go on the P11D with Class 1A National Insurance; see our guides on benefits in kind and the P11D and Class 1A National Insurance.

A worked example

Illustration only. An employee agrees to work at home three days a week. In June 2026 the employer:

sends a laptop and monitor, with a written policy allowing occasional personal use: exempt under section 316;
reimburses £180 the employee spent on an office chair and desk lamp, chosen from an approved list for work use: exempt under section 316ZA;
pays £6 a week towards household costs: exempt under section 316A;
pays half the employee’s existing family broadband bill: taxable, as the connection is not new and is used by the whole household.

When the employee leaves two years later and keeps the laptop, a benefit arises on the transfer.

What mistakes come up most often?

Applying section 316ZA to reimbursements of costs incurred before 6 April 2026.
Reimbursing items the employee chose for personal reasons, which fails the sole purpose and intention tests.
Having no written private use policy, leaving nothing to show HMRC that use was not significant.
Letting leavers keep laptops without valuing the transfer.
Providing equipment through salary sacrifice. GOV.UK says office equipment provided this way is not exempt and the higher of the salary given up and the cost must be reported.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.