Home Office Expenses — United Kingdom Tax Rules

Claim costs for working from home including utilities, rent proportion, and the HMRC flat rate allowance.

Claimable: Partially claimable · Tax authority: HMRC

HMRC Rules

• HMRC allows sole traders to claim a proportion of household costs when working from home.
• You can use the simplified flat rate: £10/month (25–50 hrs), £18/month (51–100 hrs), or £26/month (101+ hrs).
• Alternatively, calculate actual costs by apportioning rent/mortgage interest, utilities, council tax, and broadband by the proportion of rooms and time used for business.
• You cannot claim both the flat rate and actual costs for the same expenses in the same period.
• A dedicated room used exclusively for business may allow a higher claim, but could affect Capital Gains Tax private residence relief on the property.
• Actual costs method: divide total household costs by the number of rooms, then multiply by the fraction of the day the room is used for business.

Limits

Flat rate: up to £312/year (101+ hrs). Actual costs: no fixed cap, but must be proportionate and evidenced.

Worked Example

Sarah works from a spare bedroom 40 hours/week. Her annual household costs are £12,000 (rent, utilities, broadband). The room is 1 of 5 rooms, used 80% for business. She claims £12,000 × 1/5 × 80% = £1,920. Alternatively, she could use the flat rate of £26/month = £312/year (101+ hrs). She chooses actual costs for the larger deduction.

Record Keeping

• Keep utility bills, rent receipts, or mortgage statements
• Record hours worked from home each month if using the flat rate
• Note the number of rooms and which are used for business
• Document your apportionment calculation method
• Keep broadband and phone bills if including a proportion

Frequently Asked Questions

Can I claim home office expenses if I only work from home part-time?

Yes. The HMRC flat rate starts at just 25 hours per month (£10/month). For actual costs, reduce the proportion to reflect the time you spend working from home — for example, if you work from home 3 days out of 5, use 60% of the room's share of household costs.

Does claiming home office affect my mortgage or council tax?

Using the flat rate has no impact on either. Claiming actual costs with a dedicated room could theoretically affect Capital Gains Tax private residence relief, but HMRC says this risk is minimal if the room is also used personally. Separate council tax changes are very unlikely unless you run a significant commercial operation from home.

Can I claim home office and a coworking space in the same year?

Yes. You can claim both for the periods you use each. If you work from home some days and use a coworking space on other days, claim the home office costs for the days you work from home and the coworking membership separately. Just don't double-count the same days.

Can I claim mortgage interest as part of my home office costs?

Yes, a proportion of the interest element of mortgage payments (not the capital repayment) can be included in actual costs. Apply the same room and time apportionment. If your annual mortgage interest is £6,000 and you use 1 of 4 rooms for business 60% of the time, you can claim £6,000 × 1/4 × 60% = £900.

Is there a maximum I can claim for the flat rate?

The maximum flat rate is £312/year (101+ hrs) for those working 101 or more hours per month from home. There is no higher tier. If your actual costs calculation produces a higher figure, it is usually worth switching to the actual costs method instead.