Can You Claim Tax Relief for Working From Home?
Working from home is now a normal part of life for many employees, directors and self-employed people.
But it also creates extra household costs.
You may use more:
- Electricity
- Heating
- Broadband
- Telephone
- Office equipment
- Furniture
- Stationery
That leads to a common question:
Can you claim tax relief for working from home?
Potentially, yes.
But the rules depend heavily on whether you are an employee, a company director or self-employed, and whether the costs are genuinely connected to your work.
Employees have stricter rules
Employees cannot simply claim a proportion of every household bill because they sometimes work from home.
The rules are more restrictive.
In general, tax relief may be available where you are required to work from home and incur additional household costs because of that arrangement.
This is different from choosing to work from home for convenience.
The exact circumstances matter.
What costs can employees potentially claim?
Where the conditions are met, allowable additional costs may include things such as:
- Extra heating
- Additional electricity
- Increased metered water usage
- Business telephone calls
The key word is additional.
You normally cannot claim for costs that would have existed anyway, such as:
- Mortgage payments
- Rent
- Council Tax
- Broadband that would have been paid regardless
- General household insurance
The expense needs to arise because you are working from home.
What if your employer pays you?
An employer may reimburse certain homeworking costs.
Where the payment meets the relevant tax rules, it may be possible for the reimbursement to be made without creating additional Income Tax or National Insurance.
This can sometimes be simpler than the employee making a personal claim afterwards.
Employees should check:
- Whether their employer already pays a homeworking allowance
- What expenses are covered
- Whether receipts are required
- Whether the reimbursement is tax-free
Do not claim tax relief twice for the same cost.
What about company directors?
Company directors can be in a slightly different position.
A director working from home may incur costs on behalf of the company.
The company may potentially reimburse qualifying business expenses, provided the payments are properly supported and relate to company activity.
Examples might include:
- Business telephone calls
- Office supplies
- Certain equipment
- Qualifying additional household costs
The important point is to keep the company and personal finances clearly separated.
Merranti’s accountancy services can help owner-managed companies structure and record director expenses correctly.
Can your company pay for office equipment?
Potentially, yes.
If equipment is provided by the company primarily for business use, the tax treatment may differ from buying it personally and trying to reclaim the cost later.
Examples include:
- Laptop
- Monitor
- Keyboard
- Desk equipment
- Business software
The exact treatment depends on ownership, business use and whether any significant private benefit arises.
For directors, it is often worth considering the correct structure before making the purchase.
What if you are self-employed?
Self-employed individuals generally have broader scope to claim business-use household costs than employees.
If you work from home, you may be able to claim a reasonable proportion of certain costs based on business use.
These could include:
- Heating
- Electricity
- Council Tax
- Mortgage interest
- Rent
- Broadband
- Telephone
- Insurance
The amount claimed should reflect the actual business use of the home.
How do you calculate business use?
There is no single method that works for every home.
A reasonable calculation might consider:
- Number of rooms
- Number of rooms used for business
- Hours used
- Days used
- Actual household costs
For example, if one room out of five is used partly for work, you would not normally claim 20% of all household costs automatically if that room is also used personally.
Time and private use need to be considered.
The calculation should be reasonable and supportable.
What is the simplified expenses method?
Self-employed individuals may also be able to use simplified expenses for homeworking.
Instead of calculating the exact business proportion of every household bill, a flat-rate method may be available based on the number of hours worked from home each month.
This can reduce administration.
However, the simplified method may not always produce the largest deduction.
Someone with substantial actual homeworking costs may prefer to calculate the real business proportion instead.
Which method is better?
It depends on your circumstances.
Simplified expenses may suit you if:
- Your household costs are modest
- You want a straightforward calculation
- You work predictable hours from home
- You want to reduce bookkeeping complexity
Actual-cost calculations may suit you if:
- You work from home extensively
- Household costs are significant
- You have a dedicated office
- You are comfortable keeping detailed records
The best option is not necessarily the one producing the largest claim.
It should also be practical and defensible.
Keep evidence
Whatever method you use, keep records.
Useful evidence can include:
- Utility bills
- Broadband invoices
- Telephone bills
- Rent statements
- Mortgage-interest information
- Council Tax bills
- Insurance
- Equipment invoices
- Working patterns
Good bookkeeping makes these expenses much easier to track throughout the year.
Be careful with exclusive business use
Using part of your home exclusively for business can create wider tax implications.
This is particularly important for homeowners.
If a room or area is used only for business and never for personal purposes, that may affect the availability of full Private Residence Relief when the property is eventually sold.
For example, a dedicated treatment room or office used exclusively for business could potentially create a Capital Gains Tax issue on part of the property.
This does not mean you should never have a home office.
It means some private use can be relevant when considering the wider tax position.
Working from the kitchen table is different
If you work from:
- Kitchen table
- Spare bedroom
- Living room
- Study also used personally
the tax consequences may be different from a space used exclusively for business.
A room does not necessarily become a commercial area simply because you occasionally work there.
The real use of the space matters.
Can you claim broadband?
Potentially, but this depends on who is claiming and whether there is a genuine additional business cost.
For employees, an existing broadband contract may not qualify simply because you now use it for work.
For self-employed people, a reasonable business proportion may be allowable.
If a separate broadband connection exists solely for business, the position may be clearer.
Keep evidence showing how the service is used.
Can you claim your mobile phone?
Again, the structure matters.
If self-employed, the business proportion of mobile-phone costs may potentially be deductible.
For limited companies, a company-provided mobile phone can have different tax treatment from reimbursing a director’s personal contract.
It is worth deciding how telephone costs should be structured rather than paying everything personally without reviewing the position.
Can you claim office furniture?
Furniture can be more complicated than ordinary running costs.
A desk or chair bought purely for business use may potentially qualify for tax relief depending on the business structure and circumstances.
However, personal use, ownership and the type of taxpayer all matter.
Do not assume that every item in a home office is automatically tax-deductible.
Do you need a separate room?
No.
You do not necessarily need a dedicated home office to qualify for homeworking expenses.
A self-employed person working regularly from a shared room may still have genuine business-use household costs.
The claim simply needs to reflect the actual use.
What if you only work from home occasionally?
Occasional homeworking may result in a smaller claim.
For example, someone working from home one afternoon per week has a very different level of business use from someone operating entirely from home.
Your expense claim should reflect that difference.
Do not claim personal costs as business expenses
This sounds obvious, but it is a common problem.
Examples of questionable claims might include:
- Entire household electricity bill
- Full broadband bill despite significant family use
- Complete rent payment
- General home repairs unrelated to work
- Furniture mainly used personally
Tax relief is available for legitimate business expenditure.
It is not a way to transfer ordinary personal living costs into the business.
Review the position if your working pattern changes
Your claim may need to change if you:
- Start working from an office
- Increase homeworking
- Move house
- Convert a dedicated workspace
- Become self-employed
- Incorporate your business
- Start employing staff
A calculation that was reasonable three years ago may no longer reflect your current situation.
Frequently Asked Questions
Can employees claim tax relief for working from home?
Potentially, but the rules are restrictive and generally depend on being required to work from home and incurring additional household costs.
Can self-employed people claim household expenses?
Yes, a reasonable business proportion of qualifying household costs may potentially be claimed.
Can I claim my full broadband bill?
Usually not where the connection is also used personally. The business proportion and the type of taxpayer matter.
Can my limited company pay for my home office equipment?
Potentially, depending on ownership, business use and the type of item purchased.
Can working from home affect Capital Gains Tax when I sell my house?
Potentially, if part of the property has been used exclusively for business. Private Residence Relief should be considered.
Should I keep receipts?
Yes. Keep supporting records for household costs and equipment where a claim is being made.
Final thoughts
Working from home can create legitimate tax deductions.
But the rules are different for:
- Employees
- Directors
- Self-employed individuals
The key questions are:
- Is the cost genuinely connected to work?
- Is it additional?
- How much of the cost relates to business use?
- Is there supporting evidence?
- Could the claim create wider tax implications?
The strongest approach is to calculate a reasonable claim and keep the records to support it.
At Merranti Accounting, we help individuals and business owners understand which expenses can legitimately be claimed and how they should be recorded.
Explore our bookkeeping services or contact Merranti Accounting if you need help understanding homeworking expenses.
Senior Accountant, Merranti Accounting
Jenny is a Senior Accountant at Merranti Accounting, supporting individuals and businesses with taxation, accounts and financial reporting. She helps clients understand which costs can legitimately be claimed and how expenses should be recorded to support accurate tax reporting.
Author image: Use Jenny’s existing Merranti headshot.
