If you work from home, you can claim part of your household costs as a business expense. HMRC allows two methods, and you pick the one that gives the fairer result. This guide is general information for sole traders. Employees follow different rules, so check GOV.UK.
Method 1: the simplified flat rate
You claim a fixed monthly amount based on the hours you work at home, with no need to work out each bill:
- £10 a month for 25 to 50 hours.
- £18 a month for 51 to 100 hours.
- £26 a month for 101 hours or more.
The flat rate is meant to cover extra costs such as heating, lighting and water. You can still claim separately for the business share of your phone and broadband.
Method 2: a share of actual costs
Add up the household bills that rise because you work from home, such as heating, electricity, water, broadband and phone. Then claim a fair business share, based on the number of rooms used and the time they are used for work.
An example
A sole trader uses one of five main rooms as an office, so the room is 20% of the home. Annual heating and electricity bills are £2,400, and 20% of that is £480. Because the room is only used for work part of the week, a fair claim might be lower, for example half: £240. The flat rate for 101 or more hours is £26 × 12 = £312, which is higher in this case. If the fair actual share were above £312, actual costs would win. If your bills are low, the flat rate is simpler and often better.
Which should you choose?
- Flat rate: simple, no need to keep bills for the claim, good if your home costs are low.
- Actual costs: can be larger if you have high bills and a dedicated room, but needs calculations and records.
You must use one method for the claim in a tax year. Do not double-count the same costs.
What you cannot claim
- Costs that are the same whether or not you work from home.
- The private share of any bill.
- Rent or mortgage costs, except in limited cases. Ask an accountant if you use part of your home exclusively for business.
Keep records
- A note of the hours you work at home each month.
- Copies of bills for any actual-cost claim, with your calculation.
- Your phone and broadband bills with a sensible business share.
See our allowable expenses guide and cheat sheet.
How AvrioBooks helps
Record your home-working claim as a monthly cost and attach your calculation. Your profit and loss shows the effect. See expense tracking software.
Frequently asked questions
What are the HMRC flat rates for working from home?
£10 a month for 25 to 50 hours, £18 for 51 to 100 hours and £26 for 101 hours or more.
Can I claim for broadband and phone as well as the flat rate?
You can claim the business share of phone and broadband separately from the flat rate.
Can I use both methods?
Choose one method for the claim in a tax year, and do not count the same costs twice.
Do I need receipts for the flat rate?
You do not need bills for the flat-rate amount, but keep a note of your hours.
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