Working From Home Rules Are Changing: What Does It Meanfor Small Businesses?

Working from home has become a normal part of working life for many businesses, but changes announced by the Government could make it harder for employers to refuse flexible-working requests without good reason.

Despite some of the headlines, employees are not being given an automatic right to work from home.

Instead, the changes will strengthen the existing right to request flexible working. Employers will generally need to agree to a statutory flexible-working request unless there is a reasonable business reason for refusing it.

For small businesses, that could have practical and financial implications, so what is actually changing and what should employers be thinking about now?

What is actually changing?

Employees already have the right to request flexible working from their first day in a job. This can include changes to their hours, working pattern or where they work, including working from home.

Under the new rules, employers will generally need to agree to a statutory flexible-working request unless there is a reasonable business reason for refusing it. If a request is refused, the employer will need to explain why that decision is reasonable and link it to one or more of the eight business reasons already set out in legislation.

These include additional costs, an inability to reorganisework amongst existing staff, an inability to recruit additional staff, anegative impact on quality or performance, difficulties meeting customerdemand, insufficient work during the periods the employee proposes to work andplanned structural changes to the business.

You can find the full list in the Acas guidance on statutory flexible-working requests.

The important distinction is that businesses will still be able to say no. What is changing is that employers will need to be better prepared to demonstrate why refusing that particular request is reasonable, rather than simply relying on one of the permitted reasons without further explanation.

When do the new rules come into effect?

At the moment, we do not have an exact date. The Government has confirmed that the new flexible-working provisions will come into effect during 2027, but no specific implementation date has yet been announced. Further guidance is also expected before the changes take effect.

We will update this article once the implementation date and further guidance are confirmed.

What could it cost small businesses?

For larger organisations with dedicated HR departments, a more formal process may not feel particularly significant. For an SME, where the business owner or senior management team may deal with these requests themselves, there is a cost in management time.

There may also be costs associated with additional IT equipment, software, cyber security and providing appropriate equipment for employees working remotely.

But there is another side to the calculation. Flexible working can help businesses recruit and retain good people. If refusing a request results in an experienced employee leaving, the cost of recruitment, training and lost productivity could considerably outweigh the cost of accommodating their request.

That is why we would encourage businesses to look at the whole financial picture, rather than assuming that either office-based or homeworking is automatically the cheaper option.

Do not forget working-from-home expenses

There has also been a separate tax change this year. From 6th April 2026, employees can no longer personally claim tax relief from HMRC for additional household costs incurred while working from home.

Employers can, however, still make qualifying tax-free homeworking payments in certain circumstances. Businesses reviewing their flexible-working policies may therefore want to consider expenses at the same time. Will you provide equipment? Will you contribute towards homeworking costs? And, if you do, are those payments being treated correctly for tax purposes?

What should businesses do now?

There is no need for businesses to make immediate changes, but there is an opportunity to prepare.

Review your flexible-working policy, understand how requests are currently handled and, importantly, think about the commercial reasons behind your working arrangements.

If having employees in the office is important for customer service, training or productivity, understand why and be prepared to evidence it. Equally, if greater flexibility could help you retain good employees or reduce costs, that should form part of the calculation too.

For us, this is not really a question of whether working from home is good or bad. It is about finding an arrangement that works commercially for the business while being reasonable for the employee.

As accountants, that is the part we are particularly interested in. Look at the numbers, understand the wider costs and make the decision based on what works for your business, rather than simply following the wider debate around working from home.

If you would like to discuss the financial implications for your business, get in touch for a free, informal chat.

This article reflects the position as at 22 September2026. The new flexible-working provisions are expected to take effect during 2027, although the Government has not yet confirmed an exact implementation date.

‍