Can I claim expenses for working from home?

At Towerstone Accountants we provide specialist personal tax services, for self employed, and individuals across the UK. This article has been written to explain Can I claim expenses for working from home, in clear practical terms, so you understand how personal tax and Self Assessment rules apply in real situations. Our aim is to help you stay compliant, avoid costly mistakes, and make confident tax decisions.

Working from home is now a normal part of working life for millions of people across the UK. From my own experience running an accountancy practice, this is one of the most common questions I am asked by employees, sole traders, landlords, and company directors. People know they are using more electricity, more heating, more internet, and more space, and quite rightly they want to know whether the tax system recognises that cost.

The honest answer is yes, in many cases you can claim expenses for working from home. The more important answer is that the rules are very different depending on how you work, and this is where mistakes are often made. I regularly see people underclaim because they assume nothing is allowed, and just as often I see people overclaim because they follow advice that does not apply to their situation.

In this article I want to explain the working from home rules properly, in plain English, and based on real UK guidance and real experience dealing with HMRC. I will cover employees, self employed individuals, and company directors separately, because they are not treated the same. I will explain what you can claim, how claims are calculated, what records you need to keep, and where people most commonly get caught out.

My aim here is not to push aggressive claims. It is to help you claim what you are genuinely entitled to, confidently, and in a way that stands up if HMRC ever asks questions.

What HMRC Actually Means by Working From Home

Before you even think about expenses, it is essential to understand what HMRC means when it talks about working from home. This is the part most people misunderstand.

HMRC does not consider someone to be working from home simply because they occasionally log on in the evening or answer emails at the weekend. For tax purposes, your home needs to be a necessary place of work, not just a convenient one.

In practice, I look at three broad categories when advising clients.

• Employees who are required to work from home

• Self employed individuals who use their home for business

• Company directors who work from home for their own company

Each category has its own rules, and mixing them up is where trouble starts.

Claiming Working From Home Expenses as an Employee

Employees face the strictest rules, and this often surprises people.

As an employee, you can only claim working from home expenses if your employer requires you to work from home. Choosing to work from home, even if it saves your employer money, does not automatically qualify.

HMRC looks at factors such as whether your employer has an office available for you, whether your contract specifies home working, and whether working from home is necessary to do your job.

If you could work from an office but prefer not to, HMRC generally considers home working to be a personal choice, and no claim is allowed.

The HMRC Flat Rate for Employees

If you do qualify, HMRC provides a simple option that most employees use.

You can claim a flat rate of £6 per week, which works out at £312 per year. This can be claimed without keeping receipts or calculating actual costs.

This flat rate is designed to cover additional household costs such as electricity, heating, and water. It does not cover internet or phone costs separately, unless those costs increase specifically because of work.

From my experience, this flat rate works well for most employees, because it is simple, low risk, and rarely questioned by HMRC.

Claiming More Than the Flat Rate

It is possible for employees to claim more than £6 per week, but this is where things become more complex and more risky.

To claim more, you must be able to demonstrate that your household costs have genuinely increased as a result of working from home, and you must calculate the work related proportion accurately.

This usually involves looking at:

• Total household costs

• The number of rooms in the property

• The amount of time those rooms are used for work

In reality, I rarely recommend this approach for employees. The additional tax relief is often small, and the record keeping burden is much higher. Unless there is a very clear and significant increase in costs, the flat rate is usually the sensible option.

How Employees Actually Claim the Relief

Employees claim working from home expenses through their Self Assessment tax return, or by submitting a P87 form to HMRC if they do not complete a tax return.

The relief is given at your marginal tax rate, not as a cash payment. For example, a basic rate taxpayer claiming £312 per year would receive tax relief of £62.40.

This is another area where expectations sometimes do not match reality. You are not getting £312 back in your pocket, you are getting tax relief on that amount.

Working From Home Expenses for the Self Employed

Self employed individuals generally have much more flexibility when it comes to claiming working from home expenses, but with that flexibility comes responsibility.

If you are self employed and work from home, either full time or part time, you can usually claim a proportion of your household running costs as business expenses.

HMRC accepts that your home is a place of business, as long as you genuinely carry out your trade there.

Simplified Expenses for the Self Employed

HMRC offers a simplified expenses method which many sole traders find helpful.

Under this method, you claim a flat monthly amount based on the number of hours you work from home.

• 25 to 50 hours per month allows a £10 claim

• 51 to 100 hours per month allows a £18 claim

• 101 hours or more per month allows a £26 claim

These amounts are intended to cover household running costs such as heat, light, and power.

I often recommend this method for smaller businesses or people who want simplicity. It is easy to apply, low risk, and HMRC is comfortable with it.

Claiming Actual Household Costs

Alternatively, you can claim a proportion of your actual household costs.

This usually includes:

• Electricity and gas

• Water

• Council tax

• Rent or mortgage interest

• Broadband, if used for business

The usual method is to apportion costs based on the number of rooms used for business, and the amount of time those rooms are used for work.

For example, if you have five rooms in your home, and one is used as an office for half the time, you might claim ten percent of eligible costs.

This method often produces a higher claim, but it requires careful calculation and good records. HMRC will expect your figures to be reasonable and consistent year to year.

A Word of Caution on Exclusive Use

One of the most important points I explain to self employed clients is the concept of exclusive use.

If a room is used exclusively for business, meaning it is never used for personal purposes, there can be capital gains tax implications when you sell your home.

In practice, I usually advise clients to ensure that rooms have some personal use, even if minimal, to avoid this issue. A sofa bed or occasional personal use can make a big difference from a tax perspective.

Working From Home Expenses for Company Directors

Company directors sit in a slightly awkward position, and this is where I see the most confusion.

As a director, you are an employee of your company, but you also control it. That means you need to be careful how expenses are claimed.

The Simplest Approach for Directors

The simplest and most common approach is for the company to pay you a working from home allowance of £6 per week.

This is treated as an allowable business expense for the company, and it does not create a taxable benefit for you personally.

From my experience, this is the safest option, and it works well for most small companies.

Charging Rent to Your Company

Some directors choose to charge rent to their company for the use of home office space.

This can increase the amount claimed, but it also introduces personal tax implications, because the rental income must be declared on your personal tax return.

It can also complicate matters around mortgage terms and capital gains tax.

I only recommend this approach where there is a clear commercial justification and proper advice has been taken. For most directors, the £6 per week allowance strikes the right balance.

What You Cannot Claim When Working From Home

Understanding what you cannot claim is just as important as knowing what you can.

In my experience, HMRC challenges usually arise because someone assumes a cost is allowable when it is not.

Generally, you cannot claim:

• Costs that would exist anyway, without any business use

• Full mortgage payments, only the interest element where relevant

• Home improvements that are capital in nature

• Private broadband or phone costs, unless there is a clear business proportion

Being reasonable and consistent is key. HMRC does not expect perfection, but it does expect common sense.

Record Keeping and Evidence

Good record keeping makes everything easier.

Even where flat rates are used, I always recommend keeping basic evidence, such as utility bills and internet contracts, in case HMRC ever asks how you arrived at your claim.

For actual cost claims, keep copies of bills, calculations, and notes explaining your apportionment method.

If you ever need to explain your claim, being able to walk HMRC through your logic calmly and clearly makes a huge difference.

Key takeaways

Working from home expenses are one of those areas where the tax rules are more generous than many people realise, but also more nuanced than most expect.

From my experience, the biggest mistakes come from assuming the rules are the same for everyone, or from trying to push claims too far without understanding the consequences.

If you take one thing away from this article, it should be this. Claim what is fair, what is supported by the rules, and what you can explain with confidence.

If you are unsure, getting advice early is almost always cheaper and less stressful than trying to fix things after HMRC starts asking questions.

You may also find our guidance on How do I claim tax relief for phone and internet costs, and Can I claim accounting fees as a business expense, helpful when reviewing related personal tax questions. For a broader overview of Self Assessment deadlines, reporting, and obligations, you can visit our self assessment guidance hub.