Home office costs

Conditions

• Sole traders can use HMRC's simplified flat rate — £10/month for 25–50 hours worked from home per month, £18/month for 51–100 hours, or £26/month for 101+ hours — or instead claim a fair proportion of actual costs (heating, electricity, Council Tax, rent, mortgage interest). The flat rate applies only where you work at least 25 hours per month from home; it does not include telephone or internet costs, which must be apportioned and claimed separately. This simplified method is available to sole traders and partnerships only, not limited companies.
• A limited company can pay a tax-free homeworking allowance to employees and directors who regularly work from home by agreement — up to £6 per week (£26 per month). Payments within this limit require no reporting and have no National Insurance implications; amounts above it count as earnings and attract Class 1 National Insurance through payroll. The HMRC source (www.gov.uk/expenses-and-benefits-homeworking) does not specifically address single-director companies, so take specific advice if this is your arrangement.
• Employees cannot claim working-from-home tax relief for the tax year 6 April 2026 to 5 April 2027 — HMRC has abolished the relief for this year. In prior years the flat rate was £6 per week, available only to employees required (not merely choosing) to work from home. Backdated claims for up to four previous tax years remain possible where the earlier conditions were met. Check GOV.UK for whether the relief is reinstated in subsequent years. (Source: www.gov.uk/tax-relief-for-employees/working-at-home)
• Any claim must reflect genuine business use only — the private-use portion is never allowable.

Common mistakes

• Claiming 100% of a household bill when the room is also used privately.
• Forgetting that selling the home later can have Capital Gains Tax consequences if a room is used exclusively for business.
• Employees assuming working-from-home tax relief is still available — the relief is abolished for the 2026–27 tax year. Even in years when it applied, it required the employee to be required to work from home, not choosing to.

What to keep

• A record of hours worked from home each month if using the simplified rate.
• Copies of household bills and a clear, reasonable basis for the business proportion if claiming actual costs.

Real-world example

A freelance designer works from a spare room roughly 25 hours a week. They use HMRC's simplified flat rate, which avoids having to apportion every bill and keeps the record-keeping light while still giving a reasonable deduction.

Frequently asked

Related allowances