Home office expenses for the self-employed: what you can claim

As more people choose to work from home, self-employed business owners often ask whether they can claim home office expenses on their tax return.

For sole traders, the answer is usually yes – but only for the part of the cost that relates to the business.

What’s the golden rule for business expenses?

The general HMRC rule is that you can only claim expenses that are wholly and exclusively for your business.

If a cost is partly personal and partly business, you must be able to show how you split the cost if HMRC asks.

That’s especially important when you work from home.

You’ll likely share heating, broadband, and electricity between your personal life and your business, so base any claims on a fair and reasonable method.

Keep notes of how you worked it out, and avoid rounding up or guessing.

Two ways to claim home office expenses

As a sole trader, there are two main approaches to claiming expenses related to working from home.

1. Claim a proportion of your household costs

This method lets you claim a portion of your actual running costs, such as electricity, rent, mortgage interest, broadband, and council tax, based on the percentage of your home used for business and how often you use it.

There’s no single correct method, but many people divide their bills based on the number of rooms or the square footage used for work. They may then reduce the figure further to reflect how much of the time the space is actually used for business.

HMRC simply says that the split should be fair and reasonable. You can find examples and more guidance in BIM47820.

Example: Your home has five rooms, and you use one as an office. One-fifth of the relevant household costs is therefore a reasonable starting point for apportioning household bills.

If that room is also used privately, reduce the claim to reflect the business use.

On a £1,000 annual electricity bill, a reasonable business claim might work out at around £48.

There is no prescribed formula, as long as the figure is reasonable and you can support any claim with evidence if asked.

2. Use HMRC’s simplified flat rate

If you’d rather avoid detailed calculations for your household running costs, you can use HMRC’s simplified expenses method instead.

The amount you can claim is based on how many hours you work from home each month:

You need to work from home for at least 25 hours during the month to use the flat rate for that month.

You don’t need receipts for the household running costs covered by the flat rate, but you should keep a record of the number of hours you work from home.

The simplified rate doesn’t necessarily cover every home-related expense.

HMRC says the flat rate does not include telephone and broadband costs, so you can still claim the appropriate business proportion of these separately. Other costs that are not part of the simplified running-cost calculation may also need to be dealt with separately under the normal rules.

Find out more in our guide to simplified expenses.

Flat rate vs proportion: which is better?

If your bills are modest or you do not want to spend time splitting household costs, the flat rate can be the simpler option.

If your bills are higher, or you use a significant part of your home for business, working out the actual business proportion may produce a larger claim.

If you run the business part-time, also check which insurance a side hustle may need.

For very small side businesses, it is also worth checking the £1,000 trading allowance. If you use the trading allowance against the income, you cannot also deduct business expenses from the same income.

What you can’t claim

• The whole of your household bills. Only the fair business portion is allowable.
• Mortgage capital repayments. Only the interest element can potentially be apportioned.
• General household furniture used personally. Different rules may apply to equipment bought specifically for the business.
• Everyday meals at home. Subsistence rules differ when travelling for work.
• Broadband or phone costs in full if you use them personally. Claim the reasonable business share instead – see how this works.

Can you claim part of your mortgage or rent?

If you work from home as a sole trader, you can’t deduct your whole mortgage or rent payments, but you can claim a portion of your mortgage interest or rent that relates to business use.

The percentage you claim must be based on the actual business use of the space.

You can’t claim mortgage capital repayments, only the interest portion.

If you rent your property, you may be able to claim a fair share of the rent in the same way.

HMRC takes a similar approach: work out a reasonable business proportion, taking into account factors such as the rooms used and the time spent working there.

Could it affect Capital Gains Tax when you sell?

Possibly – but only in specific situations.

If you have a room in your home that is used only for business purposes, and never for anything else, that part of your home may lose its entitlement to Private Residence Relief.

This means part of any gain could potentially be subject to Capital Gains Tax when you sell the property.

However, if your home office has both business and personal use, the whole property will usually continue to qualify for Private Residence Relief.

You can find more on this in CG64660.

What about insurance and mortgage conditions?

In most cases, running a business from home doesn’t cause problems with your mortgage, rental agreement or insurance – especially if you’re simply working from a laptop in a spare room.

That said, check the terms of your insurance policy, mortgage or tenancy agreement rather than assuming everything is covered.

You may need to update your insurance if clients regularly visit your home, or if you keep business stock or specialist equipment there.

See our main sole trader insurance guide and the specific issues to check when working from home.

Do you have to pay business rates?

Not usually. If you have a room in your home that you use for both business and personal reasons, such as a dining room that doubles as a workspace, it will normally remain part of the domestic property.

But if you’ve created a completely separate space that is used only for business – for example, a converted garage or dedicated outbuilding – business rates may become relevant.

See our guide to business rates and Small Business Rate Relief.

Keep records of how you worked out the claim

Only claim what you’re genuinely entitled to.

If HMRC ever asks questions, you should be able to show that your claim is reasonable and explain how you calculated it.

That means keeping bills, receipts and any notes or workings you used to split household costs between business and private use.

If you are unsure about a larger or more complicated claim, ask your accountant to check the basis you are using.

What if you work through a limited company?

If you’re set up as a limited company, the rules are different.

A director is an office-holder of the company, so the sole trader simplified-expenses rules above do not apply.

However, your company can still pay you towards the additional household costs of working from home.

Where there is a qualifying homeworking arrangement, the company can pay you £6 per week or £26 per month tax-free without having to justify the amount by reference to your actual additional costs. HMRC also says that, at this level, you do not need to keep records demonstrating the extra expenditure.

This is still available in 2026/27.

What changed from 6 April 2026 is the separate rule for unreimbursed costs.

Employees and directors can no longer pay additional household costs themselves and then claim a personal deduction from HMRC for those homeworking expenses. That change does not remove the employer-paid exemption under section 316A ITEPA 2003.

So, in practical terms:

• Your company can still pay you £6 per week or £26 per month tax-free where the homeworking conditions are met.
• If the company pays more than the guideline amount, you will normally need evidence showing that the higher payment represents reasonable additional household costs.
• You can no longer leave qualifying costs unreimbursed and then claim the old homeworking deduction personally from HMRC.

Some directors instead draw up a rental or licence agreement with their company for use of part of the home.

That can allow the company to deduct rent as a business cost, but the rent received personally may be taxable, so it needs to be considered properly rather than treated as an automatic tax saving.

For more information, read this useful guide: What expenses can a limited company claim for?