Working From Home Expenses for the Self-Employed

If you run your business from a spare room, the kitchen table or the corner of the lounge, part of your household costs can be a business expense. Self-employed people often under-claim here or, worse, claim too much. This guide explains the two ways to claim, what each covers and how to keep the paperwork HMRC expects.

Key takeaways

• You can claim either a simplified flat rate or the actual business share of your home running costs.
• The flat rate is based on the hours you work at home each month, and does not need bill-by-bill calculations.
• Broadband and phone are normally claimed separately, in proportion to business use.
• Only costs that relate to the business count. Personal use must be removed.
• Check the current flat rates and rules on GOV.UK before you file.

Who can claim?

Sole traders and partners who work from home can claim. Many self-employed people qualify: freelancers, consultants, tutors, online sellers and others who do admin, bookkeeping or client work at home. Even if you mainly work from a vehicle or on site, you may still do your paperwork at home. If this is you, see our Uber driver tax return guide for how drivers handle admin time. The general rule is that the cost must be wholly and exclusively for the business, or reasonably apportioned if it is shared. Our list of sole trader allowable expenses gives the wider picture.

Method one: the simplified flat rate

HMRC allows a flat monthly deduction for home use based on how many hours you work at home. It removes the need to split every utility bill. The deduction is meant to cover additional household costs such as heating, electricity and water rather than your whole home. It does not replace separate claims for the business share of your phone or broadband. HMRC sets out the hour bands and amounts on GOV.UK's working from home simplified expenses page, so confirm the current figures there.

Method two: actual costs

Alternatively, you can work out the business proportion of your real household bills. A common method is to compare the number of rooms used for work with the total number of rooms, and adjust for the time the room is used. This can produce a larger claim if you have high bills or a dedicated office, but it requires more records and a clear way of working out the share. HMRC explains the principles in its guidance on expenses for the self-employed.

Comparing the two

Worked example (illustrative)

"Bea", an illustrative example, is a freelance copywriter working from a spare bedroom. She tracks her hours in a simple calendar. For months where she works long days at home, she uses the flat rate for the relevant hour band. She also claims the business share of her broadband, based on an estimate that most of her usage is for work. At the end of the year, her accountant compares the flat rate total with the actual costs method. Because her home costs are modest, the flat rate comes out close, with much less paperwork, so she stays with it. Had she converted a garage into a dedicated studio with high heating costs, the answer could have been different. The right figure depends on your own circumstances.

What you cannot claim

• Mortgage capital repayments.
• Costs for rooms or areas used only privately.
• Council tax and rent, unless you meet the rules for a dedicated business space. Take advice first.
• Decoration or furniture for the whole house rather than for the workspace.

Common mistakes

• Claiming for the whole home. Only the business element is allowable.
• No record of hours. If you use the flat rate, keep a simple log of the hours you work at home each month.
• Confusing employee rules with self-employed rules. The reliefs are different and cannot be mixed up.
• Forgetting the capital gains tax angle. Claiming part of a home as business premises can affect relief when you sell. Ask before you claim for a dedicated room.

Not sure which method is right for you? Our personal tax service includes checking your expenses and preparing your return, so you claim what is allowed and keep the evidence to back it up.