A practical guide to the home-working costs your company can cover—and the household expenses that remain personal

Since remote working became increasingly common, one of the questions accountants hear most often is:

“What can my limited company pay for if I work from home?”

Some directors assume they can put part of their mortgage through the company.

Others believe every household bill becomes tax deductible.

Neither assumption is entirely correct.

The rules surrounding home working can be confusing because several different taxes are involved. Income Tax, Corporation Tax, VAT and Benefit in Kind rules can all affect how expenses are treated.

Getting it wrong can lead to unexpected tax bills. Getting it right can allow your company to claim genuine business expenses while remaining fully compliant with HMRC’s rules.

This guide explains what company directors need to know in the 2026/27 tax year.

The short answer

If you work from home through your limited company, the company can usually pay certain business-related costs.

However, it cannot simply pay your normal household bills because you occasionally answer emails from your spare bedroom.

Whether an expense can be paid depends on:

• Why the expense exists
• Who owns the contract
• Whether the expense is wholly and exclusively for business
• Whether there is any private benefit
• How the company records the payment

Each expense should be considered individually.

Why HMRC treats home working differently

Your home is primarily a private residence.

Even if you operate your business from home, many household costs would still exist if the business did not.

For example:

• Mortgage payments
• Council Tax
• Home insurance
• Water rates
• Television subscriptions
• General household electricity

These costs are primarily personal.

HMRC therefore distinguishes between:

• Existing personal living costs.
• Additional costs created because of business activities.

This distinction is fundamental to understanding what your company can and cannot pay.

What expenses can usually be claimed?

Depending on your circumstances, the company may be able to cover costs including:

• Office equipment
• Computer monitors
• Business laptops
• Business software
• Printers
• Office desks
• Office chairs
• Business stationery
• Business telephone contracts
• Certain internet costs
• Business insurance
• Professional subscriptions
• Business postage

Each purchase should have a genuine business purpose.

Can my company buy office furniture?

Yes.

If your business requires you to work from home regularly, the company can generally purchase equipment necessary for your work.

This might include:

• An ergonomic office chair.
• A desk.
• Filing cabinets.
• Storage.
• Office lighting.
• Computer equipment.

These items remain company assets and should be recorded appropriately.

Can my company pay my internet?

This is one of the most misunderstood areas.

If you already have broadband installed for personal use, simply asking your company to pay the monthly bill is unlikely to create the tax result many directors expect.

However, where additional broadband costs arise specifically because of business, or where a dedicated business connection exists, different treatment may apply.

The exact circumstances matter.

What about electricity and heating?

Working from home inevitably increases household energy usage.

Lighting.

Heating.

Computer equipment.

Monitors.

Charging devices.

These all consume electricity.

Rather than simply paying household utility bills, businesses should consider the appropriate methods available for recognising genuine business use.

Can my company pay my mortgage?

This is probably the biggest myth surrounding home working.

Generally speaking, no.

Mortgage repayments remain private expenditure.

Owning a limited company does not allow personal mortgage costs to become company expenses.

There are separate rules where companies occupy commercial property or where formal rental arrangements exist, but these require careful planning.

For most directors, the family mortgage remains a private cost.

Can the company pay rent?

Some directors enter into a formal licence agreement allowing the company to use part of their home.

This can allow rent to be paid by the company in certain circumstances.

However, the arrangement needs careful consideration because it may affect:

• Personal tax.
• Capital Gains Tax relief.
• Record keeping.
• Mortgage conditions.
• Insurance.

The decision should never be made without advice.

What about council tax?

Council Tax is generally a private household expense.

The fact that you occasionally work from home does not automatically make part of the Council Tax deductible.

Different considerations may arise if part of the property becomes exclusively business premises, but this creates wider issues that should be reviewed carefully.

Can my company pay for cleaning?

If cleaning relates specifically to a dedicated business area or company-owned equipment, the position may differ from ordinary household cleaning.

General domestic cleaning remains a private expense.

Home office equipment

Many companies legitimately purchase:

• Laptops.
• External monitors.
• Docking stations.
• Office chairs.
• Desks.
• Keyboards.
• Computer mice.
• Printers.
• Webcams.
• Noise-cancelling headsets.

These purchases often provide genuine business value while improving productivity.

Mobile phones

Where the company provides a qualifying mobile phone under the appropriate rules, the tax treatment is generally more favourable than many other household costs.

This is why many accountants recommend company mobile contracts where appropriate.

Broadband upgrades

Many directors upgrade to faster broadband for business purposes.

Whether the additional cost is allowable depends on why the upgrade occurred and how the contract has been arranged.

This should be reviewed individually rather than assuming all upgrades qualify.

Good bookkeeping matters

Home-working expenses should be recorded carefully.

Businesses should retain:

• Receipts.
• Invoices.
• Contracts.
• Payment records.
• Asset registers where appropriate.

Accurate bookkeeping reduces problems during year-end accounts and provides evidence if HMRC requests further information.

Common mistakes

Some of the most common errors include:

• Putting the mortgage through the company.
• Claiming all household utilities.
• Mixing personal and company purchases.
• Failing to keep invoices.
• Assuming every expense is tax deductible.
• Buying luxury equipment with little commercial justification.
• Forgetting that company assets belong to the company.

Why planning is important

Every director’s circumstances are different.

Questions include:

• Do you own or rent your home?
• Is there a dedicated office?
• Do you have employees?
• How often do you work from home?
• Does the company own equipment?
• Are there existing rental arrangements?

The answers affect which options are appropriate.

Frequently Asked Questions

Can I work entirely from home through my limited company?

Yes. Many directors operate successful businesses entirely from home.

Can my company buy my desk?

Yes, where it is purchased for genuine business use.

Can I put my mortgage through the company?

No.

Can the company pay my electricity?

The treatment depends on the circumstances. General household bills are not automatically business expenses simply because you work from home.

Can my company pay my broadband?

Possibly, but ownership of the contract and the reason for the expense are important.

Can I claim office equipment?

Yes, provided it is purchased for business purposes and recorded correctly.

Can my company pay for an office chair?

Yes.

Do I need to keep receipts?

Absolutely. Every business expense should be supported by appropriate records.

Final thoughts

Working from home offers flexibility, but it also creates uncertainty about which expenses your limited company can legitimately pay.

Rather than trying to maximise every possible claim, the better approach is to understand which costs genuinely relate to the business and ensure they are recorded correctly.

This protects both the company and the director while ensuring available tax relief is claimed where appropriate.

At Merranti Accounting, we help company directors understand the rules around home-working expenses, company purchases and tax-efficient business costs. Whether you’re setting up a home office or reviewing your existing arrangements, we can help you claim expenses correctly while remaining compliant with HMRC requirements.

Written by Steve Watts