Why home office expenses matter more than ever
For many small business owners and employees, the kitchen table has quietly turned into the main office. What started as a temporary solution has become a long‑term way of working, with laptops, printers and ring lights permanently plugged in at home.
What has not always kept up is the tax planning. A lot of people simply do not claim anything for using their home for work, or they guess a number and hope HMRC never asks about it. The reality is that UK rules do allow you to claim a fair share of your home costs – as long as you do it in a structured, reasonable way.
In this guide, we walk through the key routes for claiming home office expenses in the UK, explain the differences between self‑employed and employees, and highlight the main traps to avoid. The aim is simple: help you keep more of what you earn, without creating problems with HMRC later.
Who can claim home working expenses?
Before thinking about numbers, you need to be clear whether you actually qualify. For HMRC, there are two main groups:
- Self‑employed – sole traders and some partners who run their business from home.
- Employees – people on PAYE who are required to work from home for all or part of the week.
In both cases, you can only claim costs that are linked to your work. Personal living costs are never allowable. HMRC’s rule is that expenses must be incurred “wholly and exclusively” for the purposes of the trade (self‑employed) or must be additional household costs caused by working from home (employees).
If you simply choose to work from home, but your employer gives you access to suitable office space, your ability to claim as an employee is very limited. Self‑employed individuals have more flexibility, because their home is often the genuine base of their business.
Self‑employed option 1 – HMRC simplified expenses
If you are self‑employed, HMRC gives you a very straightforward way to claim something for the use of your home: simplified expenses. This is a flat‑rate method based on the number of hours you work from home each month.
You can use simplified expenses if you:
- Are self‑employed.
- Work from home for at least 25 hours per month.
The monthly flat rates are currently:
- 25 to 50 hours of business use per month – £10 per month.
- 51 to 100 hours per month – £18 per month.
- 101 hours or more per month – £26 per month.
These rates cover general home running costs such as heat and light, but they do not include telephone or internet. For those, you still claim the business proportion separately using actual costs.
When does simplified expenses work well?
This method tends to work best when:
- Your home costs are relatively modest.
- You do not want to spend time on detailed calculations.
- You work from different locations, and your home office use changes from month to month.
HMRC even provides an online “simplified expenses checker” so you can compare the flat‑rate result with a more detailed actual‑cost calculation. For many small traders, especially at the start, the flat rate is a good “no‑brainer” way to make sure you claim at least something.
Self‑employed option 2 – claiming actual home office costs
If your rent, mortgage interest and utility bills are significant, the flat rate will often feel too small. In that case, you can claim a proportion of your actual household costs instead.
What kind of costs can you include?
Typical allowable costs, on a business proportion, include:
- Rent, or the interest part of your mortgage payments.
- Gas, electricity and water.
- Council tax.
- Buildings and contents insurance.
- Repairs and maintenance of the property.
- Cleaning.
- Broadband and telephone – but only the business element.
You cannot claim the capital part of your mortgage repayments, and you cannot claim purely personal expenses such as TV packages, streaming subscriptions or most food costs.
How do you apportion the costs?
HMRC does not insist on one “magic formula”, but your method must be fair and defensible. A common starting point is:
- Count the number of usable rooms in the property, excluding bathrooms and hallways.
- Identify how many rooms are used for business.
- Adjust for the proportion of time the room is used for business versus personal use.
Example: a realistic home office calculation
Imagine you are a self‑employed graphic designer:
- You live in a flat with 4 usable rooms (bedroom, living room, kitchen, office).
- You use the office for work from 9am to 5 pm on weekdays, and for personal hobbies in the evening.
- Your annual household running costs (rent, utilities, council tax, insurance) are £6,000.
Step 1 – room share: 1 business room out of 4 = 25%. Step 2 – time share: office used for business 8 hours a day out of around 16 waking hours = 50%.
Overall business proportion = 25% × 50% = 12.5%.
12.5% of £6,000 = £750 that you could claim as an allowable business expense for using your home as an office.
If you also use your mobile and broadband heavily for work, you might claim an additional business share of those bills, for example, 60% of your phone and 50% of your broadband, as long as that reflects reality.
Pros and cons of the actual‑cost method
- Pros: often more generous than the flat rate, especially in high‑cost areas or where you genuinely use a large part of your home for work.
- Cons: more admin, and you need solid records and a clear explanation of your calculation if HMRC ever asks.
For many established self‑employed clients, we see that starting with simplified expenses is fine for the first year or two, but as the business grows and home costs rise, moving to an actual‑cost basis becomes more tax‑efficient.
A key trap – exclusive business use and Capital Gains Tax
A subtle but important point is how you use your workspace. HMRC looks at whether parts of your home are used “exclusively” for business.
If you claim that a room is used only as an office and never for personal purposes, you risk losing part of your main residence relief for Capital Gains Tax when you eventually sell your home. In plain English: a small extra deduction now could cause a bigger tax bill in the future.
That is why, in practice, many advisers recommend that your office is used for mixed purposes – for example, as an office during the day and as a guest room, music room or hobby room in the evenings. You still claim a sensible proportion of the costs, but you avoid creating a “pure business asset” inside your home.
Employees – how working from home relief works
If you are an employee, the rules for claiming working from home costs are much stricter than for the self‑employed. You can only get tax relief for additional household costs that you have to pay because you are required to work from home for your job, not simply because you choose to work from home for convenience. This typically applies where your employer does not provide an office you can reasonably work from, or your role means home working is objectively necessary (for example, the office is too far away to commute regularly).
There are two main ways this relief is given. The simplest is the flat‑rate method: HMRC allows tax relief of £6 per week (or £26 per month) to cover additional household costs such as heating and electricity, without needing to keep receipts. To qualify, you must be required by your employer to work from home and incur additional costs as a result, not simply choose to work from home for convenience.
Alternatively, if your additional costs are higher than the flat rate, you can claim relief based on the actual extra expenses you pay – for example, a proportion of your gas, electricity and metered water bills. In this case, you need evidence of the costs and a reasonable method to work out the work‑related share, and HMRC may ask you to justify your calculation. In many cases, the flat‑rate method is simpler and more than enough to cover the typical extra costs of occasional or hybrid working from home.
Choosing the right method for your situation
To pull this together, here is a quick snapshot of which method tends to fit which scenario:
1. New self‑employed, modest home costs, limited admin time In this case, the HMRC simplified expenses flat rate is usually the most practical choice. It is easy to apply; you do not need to track every bill in detail, and it provides a safe starting point with minimal paperwork.
2. Established self‑employed, high rent or mortgage interest, clear home office If your home costs are higher and you have a clear workspace, claiming actual costs by room and time is often more effective. This approach usually results in larger deductions and better reflects the true cost of using your home for business, as long as you keep good records.
3. Employee, employer supportive of home working Where your employer actively supports home working, the simplest route is often for them to pay the £6 per week home‑working allowance. This payment can normally be made tax‑free, it is straightforward to administer, and you do not need to submit a separate HMRC claim.
4. Employee, the employer does not reimburse If your employer does not pay anything towards your home office costs, you may still be able to claim tax relief yourself, typically on £6 per week. The claim is made directly to HMRC, is relatively simple to submit online, and, while the saving is modest, it can still add up over the year.
The right answer is not only about tax relief. It is also about how much paperwork you want, your long‑term plans for the property and your tolerance for HMRC questions if your claims are on the higher side.
How Ollen Services can help you get this right
The rules around home office expenses look simple on GOV.UK, but real life rarely fits neatly into examples. Maybe you have a box room that doubles as a nursery, or you run both a limited company and a sole trade from the same flat, or you occasionally rent a co‑working desk as well as working from home.
At Ollen Services, we help clients across Bournemouth, Poole and the wider UK to:
- Decide whether the simplified expenses or the actual‑cost method is better for them in the short and long term.
- Build a clear, HMRC‑friendly calculation for their home office costs using room and time apportionments.
- Put basic systems in place – from tracking hours worked at home to storing bills – so that claims are easy to maintain year after year.
- Review the impact on Capital Gains Tax where relevant, and avoid accidental “exclusive business use” of parts of the home.
Working from home is here to stay. Making sure you claim the relief you are entitled to – and only what you are entitled to – is a simple, legal way to reduce your tax bill. If you would like tailored advice on your own situation, we would be happy to talk.