Can I Claim Home Office Costs If I Work from My Spare Room?

This is one of the most common questions I am asked, and in my opinion, it is also one of the most misunderstood areas of UK tax. Many people work from home in some form, whether they are self employed, running a limited company, freelancing, or doing a mix of office and home based work. Quite often, that work takes place in a spare room, a box room, or a corner of the house that has gradually turned into an office.

From experience, people usually fall into one of two camps. Some claim nothing at all because they are worried about doing it wrong. Others claim far too much because they assume anything connected to their home is fair game. Both approaches can cause problems.

The truth sits somewhere in the middle. Yes, you can usually claim home office costs if you work from your spare room, but how you do it, how much you can claim, and what records you need depend heavily on your circumstances.

This article explains how it really works, what HMRC allows, what they look out for, and how to claim sensibly without creating future headaches.

What HMRC Means by Working From Home

Before talking about costs, it is important to understand how HMRC views working from home. From experience, many people assume that simply opening a laptop at home qualifies them automatically. That is not quite how it works.

HMRC expects there to be a genuine business use of your home. That means you regularly perform substantive work there, not just the occasional email in the evening. If your spare room is where you manage clients, complete admin, create products, or run the business, that usually qualifies.

In my opinion, regularity matters more than exclusivity. You do not need a dedicated office that is locked away and never used for anything else, but you do need to show that the space is genuinely used for work as part of your normal business activity.

Does It Matter If I Am Self Employed or Limited Company?

Yes, it matters a great deal. From experience, this is where confusion often starts.

If you are self employed or in a partnership, you personally run the business. Your home is also your workplace, so HMRC allows you to claim a proportion of household running costs as business expenses.

If you operate through a limited company, the company is a separate legal entity. The house belongs to you personally, not the company. This changes how costs are claimed and introduces different rules.

In my opinion, understanding which category you fall into is essential before claiming anything.

Claiming Home Office Costs as a Sole Trader or Partner

If you are self employed and work from your spare room, you can usually claim a portion of household expenses that relate to business use.

These expenses typically include electricity, gas, water, council tax, broadband, and sometimes rent or mortgage interest. From experience, what you cannot claim is the capital element of your mortgage or the full cost of buying the property.

The key principle is apportionment. You are not claiming the full bill. You are claiming a reasonable proportion based on how much of the home is used for work and how often.

For example, if you have a three bedroom house and one room is used as a home office, you might start with one third. That is then adjusted based on how much time that room is used for work compared to personal use.

In my opinion, this is where people often go wrong by being either overly aggressive or overly cautious.

The Simplified Expenses Method

HMRC offers a simplified expenses method for sole traders, which allows you to claim a flat rate amount instead of calculating actual costs.

The amount depends on how many hours per month you work from home. It ranges from £10 to £26 per month.

From experience, this method is easy, but it often results in a lower claim than you could legitimately make using actual costs. That said, it is simple, low risk, and easy to justify.

In my opinion, simplified expenses suit people with low household costs or those who want minimal admin. For others, a detailed calculation can be more tax efficient.

Using Actual Costs as a Sole Trader

If you choose not to use simplified expenses, you can calculate actual costs. This involves adding up relevant household expenses and applying a reasonable business use percentage.

Typical costs include utilities, council tax, internet, and insurance. Repairs and maintenance that relate specifically to the office space can often be claimed in full.

From experience, the biggest mistake is claiming too high a percentage without justification. HMRC expects the calculation to be sensible, not perfect.

I usually advise clients to document their method once and apply it consistently each year. In my opinion, consistency is one of the strongest defences if HMRC ever asks questions.

What About Mortgage Interest or Rent?

This is an area that causes a lot of anxiety. From experience, yes, mortgage interest or rent can be included in the calculation for sole traders, but only the interest element, not capital repayments.

The claim must still be proportionate. If one room out of five is used for work part of the time, only that proportion of interest or rent can be included.

In my opinion, this is where caution is sensible. Large claims tied to property costs tend to attract more scrutiny, particularly if they fluctuate year to year without explanation.

Capital Gains Tax and Private Residence Relief

One issue people often worry about is whether claiming home office costs affects capital gains tax when the property is sold.

From experience, this concern is often overstated. HMRC only restricts private residence relief where a room is used exclusively for business and never for personal use.

If your spare room doubles as a guest room or storage space, private residence relief is usually unaffected.

In my opinion, the key is avoiding exclusive business use. A sofa bed or occasional personal use can make a meaningful difference.

Claiming Home Office Costs Through a Limited Company

If you run a limited company, the approach is different. The company cannot simply claim a portion of household bills directly, because it does not own or rent the property.

Instead, the company usually pays you an allowance for the use of home as office. This can be done using a flat rate or by reimbursing actual costs.

From experience, most small companies use HMRC’s approved flat rate, which is £6 per week. This requires no detailed calculations and is generally accepted without question.

In my opinion, this is simple and safe, but often underclaimed.

Claiming Actual Costs Through a Limited Company

It is possible for a limited company to reimburse actual costs, but this requires more care.

The company can reimburse you for a proportion of household expenses that relate to business use. This is similar to the sole trader calculation, but the company pays you rather than claiming the cost directly.

From experience, this method requires clear documentation and consistency. It also has potential capital gains tax implications if not handled carefully.

In my opinion, unless the amounts are significant, the flat rate is usually the better option for limited companies.

Broadband and Telephone Costs

Broadband is another common area of confusion. From experience, HMRC allows you to claim the business proportion of broadband costs if the line is used for both personal and business purposes.

If the broadband is in your personal name and used for mixed use, only the business proportion can be claimed. If you take out a separate business line, the cost can usually be claimed in full.

Mobile phone costs follow similar rules. One mobile phone per employee paid for by the company can usually be claimed in full if the contract is in the company name.

In my opinion, keeping things simple here avoids unnecessary disputes.

Furniture and Equipment in the Spare Room

Furniture and equipment used in your home office are treated separately from household running costs.

Desks, chairs, monitors, and other office equipment can usually be claimed as capital allowances or expenses, depending on the cost and business structure.

From experience, these claims are often more straightforward than running costs, provided the items are genuinely used for work.

I have to say, investing in a proper chair is one of the most sensible claims you can make.

What HMRC Actually Looks For

People often imagine HMRC looking for perfection. From experience, they are usually looking for reasonableness.

They want to see that claims are proportionate, consistent, and supported by a clear method. They are far less concerned about whether your calculation is exact to the penny.

In my opinion, the biggest red flags are round numbers with no explanation, claims that change dramatically year to year, or attempts to claim personal costs as business expenses.

Record Keeping and Evidence

You do not need to submit calculations with your tax return, but you should keep them on file.

From experience, a simple spreadsheet showing how you calculated the business proportion, along with copies of bills, is more than sufficient.

I always recommend keeping a short written explanation of your method. In my opinion, this is invaluable if questions arise years later.

Working From Home Occasionally

If you only work from home occasionally, your claim may be limited or nil.

From experience, HMRC expects a level of regularity. Occasional use, such as catching up on emails once a week, is unlikely to justify a meaningful claim.

In my opinion, honesty here is important. Stretching the definition of working from home is rarely worth the risk.

Employees Working From Home

Employees can also claim working from home expenses, but the rules differ again.

Employers can pay a tax free allowance for home working, or employees can claim relief through Self Assessment.

From experience, many employees miss out on this because they assume it is not worth claiming. In reality, it can add up over time.

Common Mistakes I See

Over the years, I have seen the same mistakes repeatedly. Claiming too much. Claiming nothing out of fear. Mixing personal and business costs without explanation.

Another common issue is copying what someone else does without understanding whether it applies to your situation.

In my opinion, tax is not an area where one size fits all.

Is It Worth Claiming Home Office Costs?

For most people who genuinely work from home, yes, it is worth claiming something.

From experience, the key is proportionality. A sensible claim made consistently over time is far safer than an aggressive claim that raises questions.

I have to say, HMRC is far more forgiving of modest, well explained claims than ambitious ones that cannot be justified.

How an Accountant Can Help

This is one of those areas where a short conversation can save years of worry.

An accountant can help you choose the right method, calculate a reasonable claim, and ensure it aligns with your wider tax position.

From experience, this is especially important for limited company directors and homeowners concerned about capital gains tax.

What I Usually Recommend

In most cases, I recommend keeping it simple. Use the flat rate if it suits you. Use actual costs if there is a clear benefit and you are comfortable with the calculation.

Avoid exclusive business use of rooms. Be consistent. Keep basic records.

In my opinion, tax efficiency should never come at the cost of sleep.

A Practical Conclusion

So, can you claim home office costs if you work from your spare room? Yes, in many cases you can.

How you do it depends on your business structure, how regularly you work from home, and how comfortable you are with record keeping.

From experience, the best claims are sensible, proportionate, and boring. Those are the ones that stand up over time.

If you are unsure, ask for advice early rather than trying to fix things later. Getting it right from the start is always easier than explaining it years down the line.