June 11, 2026June 1, 2026UncategorizedMerranti

Can I Claim My Home Office Costs Through My Business?

Yes, you may be able to claim some home office costs through your business, but the rules depend on your business structure.

A sole trader may be able to claim a proportion of household costs, or use simplified expenses, if they work from home. A limited company director needs to be more careful because the company is legally separate from the director personally. Employees and directors can sometimes receive tax-free homeworking payments or claim tax relief, but only where the rules are met.

The key point is this: you cannot simply put all household bills through the business because you work from home. Claims should be reasonable, evidenced and connected to genuine business use.

This guide explains the main options for sole traders, limited company directors and small business owners.

For support with business expenses, accounts and tax planning, see Merranti’s Limited Company Accounting page.

Why home office costs need careful treatment

Working from home can increase costs. You may use more electricity, heating, broadband, phone usage, furniture, stationery or equipment. If part of your home is used for business, it is understandable to ask whether the business can contribute.

However, home office costs often have mixed use. The same broadband connection may be used for both business and personal activity. The same room may be used as an office during the day and personal space at other times. The same heating bill covers the whole property, not only the business area.

That mixed-use element is why home office claims need care.

A good claim should usually answer three questions:

What cost is being claimed?
How does it relate to the business?
How has the business-use amount been calculated?

If the answer is vague, the claim may be harder to support.

Sole traders: claiming home office costs

Sole traders can usually claim business expenses through Self Assessment where the costs are incurred wholly and exclusively for the business.

Where a sole trader works from home, there are usually two broad approaches:

use simplified expenses
calculate a reasonable proportion of actual household costs

Simplified expenses for sole traders

Simplified expenses are a flat-rate method for certain business costs, including use of home.

This can be useful because it avoids detailed calculations for household bills. Instead of working out the business proportion of gas, electricity and similar costs, the sole trader uses a set monthly amount based on the number of hours worked from home.

This approach is usually simpler, but it may not always give the highest claim.

A sole trader may prefer simplified expenses if:

they want a straightforward calculation
they work from home regularly
household cost calculations would be time-consuming
the business use of home is modest
they want to reduce record-keeping complexity

The simplified method does not usually cover everything. For example, business phone calls, business broadband or dedicated business equipment may still need separate consideration.

For sole traders who need help with Self Assessment reporting, link internally to Merranti’s Self Assessments page.

Actual home office costs for sole traders

Instead of using simplified expenses, a sole trader may calculate a business proportion of actual household costs.

This can include relevant costs such as:

electricity
gas
metered water
broadband
home insurance
rent
mortgage interest
council tax
repairs relating to the business area

The claim should be based on a fair and reasonable method. Common factors include:

number of rooms in the property
number of rooms used for business
amount of time the space is used for business
whether the room has private use as well
whether the cost relates to the whole house or only the office area

For example, if one room out of five is used as an office for part of the week, the business claim should reflect both the room proportion and the time used for business. It would not usually be sensible to claim the full cost of the room if it also has personal use.

Limited company directors: why the rules are different

Limited company directors need to be more careful than sole traders.

A limited company is legally separate from its director. This means your home costs are personal costs unless the company has a proper basis for paying or reimbursing them.

A director cannot simply move household bills into the company and treat them as company expenses. If the company pays personal household costs, the payment may create tax, payroll, benefit-in-kind or director’s loan account issues.

For limited company directors, the main options are usually:

claiming a modest homeworking allowance where conditions are met
reimbursing specific additional business costs
creating a formal rental agreement between the director and company
having the company buy business equipment directly
claiming business phone or broadband costs where correctly structured

The right option depends on the facts.

Option 1: Homeworking allowance

A limited company may be able to pay a director or employee a fixed homeworking amount tax-free where the homeworking arrangement meets the relevant conditions.

This is often the simplest route for small limited company directors who work from home but do not want complex calculations.

The benefit is simplicity. The drawback is that the amount is modest and may not reflect the full cost of working from home.

This option is usually more suitable where:

the director works from home regularly
the company does not want to reimburse detailed costs
there is no formal rental agreement
the claim is intended to cover additional household costs only
the director wants a low-admin approach
Option 2: Reimbursing specific additional costs

A company may reimburse additional costs that arise from working at home, provided the cost is genuinely business-related and evidenced.

Examples may include:

business phone calls
additional metered utilities linked to business use
office supplies
business postage
stationery
business software
small equipment used for work

The word “additional” matters. If a cost would have been incurred anyway, even without working from home, it may be harder to justify.

For example, a broadband contract already used by the household may be difficult to claim in full through the company. A separate business broadband connection used only for work may be easier to support.

Option 3: A formal rental agreement

Some limited company directors consider charging rent to their company for use of part of the home as an office.

This can be possible, but it needs care.

A formal rental arrangement may require:

a written agreement between the director and company
a reasonable commercial rent
evidence of the office space used
calculation of relevant household costs
proper company records
personal tax reporting by the director
consideration of mortgage, lease or insurance restrictions
care around capital gains tax if part of the home is used exclusively for business

This route can create more complexity than directors expect. It may be suitable in some cases, but it should not be set up casually.

For most small companies, a simple homeworking allowance or reimbursement of specific business costs may be more practical.

Option 4: Company-owned office equipment

A company can often buy equipment needed for business use.

This may include:

laptop
monitor
keyboard
mouse
desk
office chair
printer
software
headset
webcam

If the equipment is mainly for business use and any private use is insignificant, this can be a cleaner approach than trying to claim household costs.

The company should keep invoices and record the asset correctly in the accounts. Larger equipment purchases may need to be treated as fixed assets rather than ordinary day-to-day expenses.

For this section, link internally to Merranti’s Annual Accounts page because equipment, expenses and capital allowances connect to year-end accounts and Corporation Tax.

Broadband, phone and internet costs

Broadband and phone costs are common problem areas because they often have mixed personal and business use.

A sole trader may claim a reasonable business proportion of costs, provided the calculation is supportable.

For a limited company director, the position depends on how the contract is structured.

A company mobile phone contract can be relatively straightforward where it is set up correctly. A personal phone contract reimbursed by the company can be more complicated, especially where there is private use.

Broadband is similar. A household broadband contract that existed already and is used by the family is difficult to treat as wholly business. A separate business connection used for the company is easier to justify.

Can you claim rent, mortgage or council tax?

This depends on the business structure and the method used.

A sole trader calculating actual home office costs may be able to include a reasonable business proportion of certain household costs, such as rent, mortgage interest or council tax, where appropriate.

A limited company director should be more cautious. If the company pays rent to the director, there should usually be a proper rental agreement and the director may need to report rental income personally.

Mortgage capital repayments are not the same as mortgage interest. Claiming household property costs can also create wider considerations, especially if part of the home is used exclusively for business.

In practice, directors should take advice before trying to claim a significant proportion of rent, mortgage interest, council tax or household costs through a limited company.

Avoid exclusive business use of one room

If part of your home is used exclusively for business, this can create complications.

For example, using one room only as a business office and never for personal purposes may affect capital gains tax private residence relief when the property is sold. This is why many advisers recommend avoiding exclusive business use of a room at home where possible.

A room that is used as an office during working hours but also has some personal use may reduce this risk, but the facts matter.

This point should be checked before publishing and before advising clients, because property and tax consequences can be fact-specific.

Common mistakes with home office claims

Claiming all household bills

Only the business-use element should be considered. Claiming all gas, electricity, rent or broadband costs is unlikely to be appropriate where there is personal use.

Treating limited company and sole trader rules as the same

They are not the same. A sole trader and a limited company director have different tax and legal positions.

Not keeping evidence

Receipts, bills, calculations and notes should be kept. If the claim is challenged later, the business needs to show how the figure was calculated.

Ignoring personal tax consequences

If a director charges rent to their company, that rent may need to be reported personally. A company deduction can create personal taxable income.

Claiming broadband without considering personal use

Broadband is rarely 100% business unless it is a separate business connection.

Buying furniture personally and assuming the company can claim it

If equipment is for the company, it is usually cleaner for the company to buy it directly and keep the invoice.

A practical checklist before claiming home office costs

Before claiming home office costs, ask:

Am I a sole trader, limited company director or employee?
Is the cost genuinely business-related?
Is there personal use?
Is there evidence for the cost?
Has the business-use proportion been calculated reasonably?
Would simplified expenses be more suitable?
Is the company reimbursing a specific cost or paying a flat allowance?
Is a rental agreement needed?
Could the claim create personal tax consequences?
Has the claim been reviewed before year-end?

If the answer is unclear, get advice before putting significant household costs through the business.

How Merranti can help

Home office claims can be useful, but they need to be handled carefully. The correct treatment depends on whether you are a sole trader, limited company director or employee, and whether the cost is genuinely business-related.

Merranti Accounting can help review home office claims, allowable expenses, bookkeeping, annual accounts, Self Assessment, Corporation Tax and director reimbursements.

If you work from home and want to check what your business can claim, visit Merranti’s Limited Company Accounting page, see Self Assessments, or contact Merranti to discuss your position.

FAQ ideas

Can I claim home office costs if I am self-employed?

Yes, self-employed people may be able to claim home office costs. They can usually use simplified expenses or calculate a reasonable business proportion of actual household costs.

Can my limited company pay for my home office?

A limited company may be able to pay a homeworking allowance, reimburse specific additional costs, buy business equipment, or pay rent under a formal agreement. The correct route depends on the facts.

Can I claim broadband through my business?

You may be able to claim a business-use proportion, but broadband often has personal use. A separate business connection is usually easier to justify than claiming a household broadband bill in full.

Can I claim rent or mortgage costs for working from home?

Sole traders may be able to claim a reasonable business proportion. Limited company directors should be more cautious, especially if considering charging rent to the company.

Do I need receipts for home office expenses?

Yes. You should keep bills, receipts, calculations and evidence showing how the business-use amount was worked out.

Can Merranti help review home office expense claims?

Yes. Merranti can help review home office claims, business expenses, bookkeeping, Self Assessment and limited company accounts.

Schema and publishing notes

Recommended structured-data candidates:

Article schema
FAQPage schema for the FAQ section
HowTo schema may be suitable for the practical checklist
LocalBusiness or AccountingService schema if used within the wider site template

CTR improvement notes

Use “Can I claim home office costs?” because it matches direct search intent.
Include “sole traders and limited company directors” in a secondary title or H2 because this is where many competing pages become vague.
Put the short answer near the top: yes, but the rules depend on structure and evidence.
Use Self Assessments as the main supporting internal link for sole traders and Limited Company Accounting for company directors.
Include a checklist because readers need a practical way to decide whether their claim is sensible.

Fact-check before publishing

Before publishing, check the latest rules and guidance for:

simplified expenses rates for self-employed homeworking
homeworking allowance for employees and directors
employer reimbursement rules
employee working-from-home tax relief rules
business proportion calculations for household costs
capital gains tax risks from exclusive business use of home
rental agreement treatment between director and company
benefit-in-kind rules for home office equipment
VAT recovery on home office costs and equipment