An increase in home working benefits introduced at the start of the pandemic will cost the Government nearly £250m over five years, 25 times more than ministers had forecast.

The Office for Budget Responsibility (OBR) said the rise in the “home working allowance” when the crisis took hold in 2020 will cost nearly a quarter of a billion pounds by 2025 if it is maintained. 

The tax relief scheme for home workers has been in place since 2003 and is intended to help with the extra costs related to working from home, including electricity, gas and internet bills.

However, the rules were relaxed at the beginning of the pandemic to help the millions of people told to stay away from their workplaces, with the tax-free amount raised from £4 a week to £6.

The £2 a week rise was only expected to cost £10m between 2021 and 2025 when it was introduced in 2020, the spending watchdog said. 

However, the widespread continuation of remote working, even since restrictions were lifted, has drastically increased the number of people claiming the benefit, pushing up the potential cost to £245m.  

The significant increase in the cost of the scheme is likely to lead to calls to cut the benefit.

In January, The Telegraph revealed that HMRC was urgently reviewing the relief, which was understood to have a total cost of £500m across the two years of the pandemic.