If you're self-employed and work from home, HMRC allows you to claim a portion of your household costs as business expenses — helping reduce your taxable profit and your overall tax bill. There are two main ways to calculate these expenses: simplified flat rates or actual cost apportionment.

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What Expenses Can You Claim?

You can claim a proportion of the following household costs, based on business use:

• Heating and electricity

• Council Tax

• Rent or mortgage interest (not capital repayments)

• Water rates

• Internet and phone bills

• Office equipment (e.g. desk, chair, computer)

You cannot claim for:

• Personal phone calls or internet usage

• Food and drink

• Home improvements not related to your business

 

Method 1: Simplified Expenses (Flat Rate)

HMRC offers a flat-rate method based on the number of hours you work from home each month. This is ideal if you want to avoid complex calculations.

• if you work between 25 to 50 hours, you can claim £10 per month

• if you work between 51 to 100 hours, you can claim £18 per month, or

• if you work over 101 hours, you can claim £26 per month

💡 Example: If you work 60 hours/month from home for 12 months, you can claim £216 (12 × £18) as an expense.

Note: This method does not include phone or internet bills — you must calculate those separately based on actual business use.

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Method 2: Actual Cost Apportionment

If your business use of home is significant, you may claim a proportion of your actual household costs. This method requires more detailed recordkeeping but may result in a higher deduction.

To calculate:

1. Identify the number of rooms used for business

2. Estimate the percentage of time the room is used for work

3. Apply that percentage to eligible bills

💡 Example: If you use one room out of four exclusively for business, and work there 8 hours/day, you might claim 1/4 of your electricity bill, adjusted for time used.

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Recordkeeping Tips

• Keep copies of utility bills, rent statements, and internet contracts

• Maintain a log of hours worked from home

• Document how you calculated business use proportions

• Retain records for at least 5 years after the tax year ends

 

Where to Claim on Your Tax Return

• If you're a sole trader, enter these expenses in the Self Assessment tax return under “business premises” or “other allowable expenses”

• If you're a limited company director, you may need a formal rental agreement or claim a flat rate reimbursement — rules differ, so seek tailored advice

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Still not sure which option is more efficient for you, no problem, get in touch and we will guide to use the best option for your business.