Published by Westridge Accountants | Quality, Affordability & Convenience
Millions of people in the UK now work from home — whether full time, part time, or on a hybrid basis. If your home is your workplace, you may be entitled to claim a range of expenses to reduce your tax bill. This guide explains what you can claim, how to calculate it, and what rules apply to employees versus the self-employed.
Sole Traders and Self-Employed: What You Can Claim
If you’re self-employed and work from home, you can deduct a proportion of your household costs from your trading income. This reduces your taxable profit and therefore your Income Tax and National Insurance bill.
Costs you can claim a proportion of:
- Heating and electricity
- Broadband and phone (business proportion only)
- Water rates (if relevant to your work)
- Mortgage interest or rent (a proportion based on the space used for work)
- Council Tax (a proportion)
The calculation is based on the proportion of your home used for work and the proportion of time it’s used for business purposes. For example, if you work in one room of a five-room house, you could potentially claim one-fifth of relevant costs — further adjusted for the percentage of time that room is used for work.
The Simplified Flat Rate Method
Rather than calculating actual costs, HMRC allows self-employed people to use a flat rate based on hours worked at home each month:
| Hours worked at home per month | Monthly flat rate |
|---|---|
| 25 to 50 hours | £10 |
| 51 to 100 hours | £18 |
| 101 hours or more | £26 |
This is simpler but often produces a lower deduction than the actual cost method. It’s worth calculating both to see which gives you the better result.
Employees Working From Home
The rules for employees are more restrictive. You can only claim if you are required to work from home — not simply because it’s more convenient.
HMRC flat rate for employees: If your employer doesn’t reimburse you, you can claim £6 per week (£26 per month) without needing to provide receipts. This is claimed through your Self Assessment return or via HMRC’s online service.
Claiming actual costs: You can claim more than the flat rate if your actual extra costs are higher — but you must be able to prove that the costs were incurred wholly, exclusively, and necessarily for work. This is a high bar for employees, and HMRC scrutinises these claims carefully.
What employees cannot claim: Fixed costs that don’t change whether you work at home or not — such as mortgage payments, council tax, and broadband (if you’d have it anyway) — are generally not allowable for employees.
Equipment and Furniture
Self-employed: You can claim the full cost of equipment used exclusively for business — computers, printers, desks, chairs — as capital allowances (usually through the Annual Investment Allowance). If an item is used for both business and personal purposes, you can claim the business proportion.
Employees: If your employer provides equipment for home working, there’s no tax charge. If you purchase equipment yourself and your employer doesn’t reimburse you, you may be able to claim tax relief — but only if the equipment is used exclusively for work.
Using a Dedicated Room as an Office
If you use a room exclusively and regularly for business (a true home office), you may be able to claim a higher proportion of household costs. However, there is a potential Capital Gains Tax (CGT) risk to be aware of: if part of your home is used exclusively for business, that portion may not qualify for Private Residence Relief when you sell the property.
In practice, HMRC is unlikely to apply this unless the business use is exclusive and permanent — using the room occasionally for personal purposes protects your CGT position. Advice on this is recommended if you’re planning significant business use of your home.
Limited Company Directors Working From Home
If you run a limited company and work from home, your company can pay you a use of home as office charge. HMRC accepts up to £6 per week without requiring justification. Alternatively, you can charge a higher amount based on a proper calculation of additional costs — this becomes a deductible company expense, reducing your Corporation Tax bill.
The payment is treated as income in your hands, so it should be documented properly. Westridge Accountants can help you set this up correctly.
What You Cannot Claim
- Costs that would exist regardless of working from home (mortgage capital repayments, standard broadband if used personally)
- Personal food and drink at home
- Home improvements (unless directly related to your business space)
- The full cost of shared-use items where personal use is significant
How Westridge Accountants Can Help
Getting home working expenses right — whether you’re self-employed, a director, or an employee — is one of those areas where small errors can either cost you money (by under-claiming) or create problems with HMRC (by over-claiming). We help clients calculate the correct claim and make sure it’s properly recorded in their accounts and tax returns.
Want to make sure you’re claiming everything you’re entitled to? Contact us at info@westridgeaccountants.co.uk or visit www.westridgeaccountants.co.uk. Available 7 days a week, 8am to 10pm.
This article is for general guidance only and does not constitute personalised tax advice. Tax rules can change and individual circumstances vary. Please contact Westridge Accountants for advice tailored to your specific situation. Westridge Accountants Ltd is regulated by AAT and supervised by AAT for Anti-Money Laundering purposes.
Frequently Asked Questions
How much can I claim for working from home as a sole trader?
HMRC’s simplified flat rate is: £10/month for 25–50 hours worked from home per month, £18/month for 51–100 hours, and £26/month for over 100 hours. Alternatively, you can claim the actual proportion of your home costs attributable to business use — use whichever method gives a higher deduction.
Can employed workers claim working from home tax relief?
Employed workers can claim tax relief if they are required (not simply choosing) to work from home. HMRC allows £6 per week (£312 per year) without receipts, or a higher amount if you can evidence greater actual costs. This is claimed via a P87 form or through Self Assessment.
Can I claim my broadband bill if I work from home?
If you already had broadband before working from home, you can only claim the additional business-use proportion. If you have a separate line used solely for work, the full cost is claimable. Keep records evidencing the business purpose.
What household expenses can a sole trader claim for working from home?
You can claim a proportion of: electricity, heating, broadband, rent or mortgage interest, council tax, and insurance. The proportion is typically calculated based on the number of rooms used for work and the hours of business use each day.
Could using my home as an office affect Capital Gains Tax when I sell?
If a room is used exclusively for business, it could restrict the Private Residence Relief you would normally receive when selling your home, meaning part of any gain may be subject to CGT. If a room is used regularly but not exclusively for work, this risk is reduced. Seek advice before designating a room as an exclusive home office.
