Working From Home Tax Relief: How to Claim in 2025/26

Last updated: April 2026

If you work from home, whether as an employee, self-employed sole trader, or director of a limited company, HMRC allows you to claim tax relief on the additional costs of using your home as a workspace. Many people either do not know about this relief or claim less than they are entitled to.

This guide covers every method of claiming, with worked examples and comparison tables, so you can choose the approach that saves you the most money in 2025/26.

The Three Methods for Claiming Home Working Costs

HMRC offers different methods depending on your employment status. Here is a summary before we go into detail on each.

The right method depends on your status, your household costs, and how much time you spend working from home. In many cases, directors of limited companies can use a combination of the flat rate and actual costs to maximise their relief.

Method 1: The £6 Per Week Flat Rate

The simplest option. Your employer (or your own limited company) can pay you £6 per week tax-free for working from home. That is £312 per year with no receipts, no calculations, and no risk of HMRC challenge.

This payment covers the additional costs of working from home: heating, electricity, metered water, and business phone calls. It is available to employees and directors regardless of how many hours they work from home, provided they work from home regularly as part of their duties.

How to claim as an employee:

• Ask your employer to include the payment in your salary (it is not subject to tax or NI)
• If your employer will not pay it, claim via form P87 or your Self Assessment return
• Relief is applied at your marginal tax rate: £62.40/year at 20%, £124.80 at 40%, £140.40 at 45%

How to claim as a company director:

• Your company simply pays you £6/week as an expense reimbursement
• The payment is a deductible business expense for the company
• You receive it tax-free with no P11D reporting required
• Record it in your books as "home office allowance" or similar

Limitations:

• The £6/week rate has not increased since April 2020
• It does not cover the full cost of working from home for most people
• You cannot claim both the flat rate and actual costs through the same route

Method 2: HMRC Simplified Expenses (Self-Employed Only)

If you are self-employed, HMRC offers a simplified expenses scheme with flat monthly rates based on how many hours you work from home. This is different from the £6/week employee rate.

At the maximum rate (101+ hours per month), you can claim £312 per year, which is the same as the employee flat rate. For part-time home workers doing 25 to 50 hours per month, the claim drops to £120 per year.

How it works:

1. Keep a log of your business hours worked from home each month
2. Apply the flat rate from the table above
3. Enter the total on your Self Assessment return under "use of home as office"

When to use simplified expenses:

• Your household costs are relatively low
• You do not have a dedicated office room
• You want minimal record-keeping
• Your actual costs calculation comes to less than the simplified rate

When NOT to use simplified expenses:

• You have high household bills (large home, expensive area, high energy costs)
• You have a dedicated office room used exclusively for business
• Your actual costs would give you a significantly higher claim

Once you choose simplified expenses for a tax year, you must use it for all your home working costs that year. You cannot switch partway through.

Method 3: Actual Costs

The actual costs method requires more work but can deliver substantially higher tax relief. You calculate the business proportion of your real household bills and claim that amount.

This method is available to:

• Self-employed individuals claiming directly on their tax return
• Limited company directors where the company reimburses actual costs (the director receives it tax-free, the company claims it as a deductible expense)

What You Can Claim

Important for self-employed: Claiming mortgage interest or rent as a business expense means a portion of your home is treated as business premises. When you sell the property, that portion may not be covered by Private Residence Relief, creating a Capital Gains Tax liability. For most people, sticking to running costs (electricity, gas, water, broadband, insurance, council tax) avoids this issue whilst still providing meaningful relief.

For limited company directors: The company cannot reimburse mortgage interest or rent as a tax-free expense. However, the company can pay you a formal rent for business use of your home, which is a separate arrangement with its own tax implications (the rent is taxable income for you but deductible for the company).

How to Calculate Your Business Proportion

There are two elements to the calculation: what proportion of your home is used for business, and what proportion of time it is used for business.

Step 1: Space proportion

Measure your workspace and your total home. You can use room count or square footage.

• Room count: if you have a dedicated office and 5 rooms total (excluding hallways, bathrooms, kitchen), your space proportion is 1/5 = 20%
• Square footage: office is 12 sq m, home is 95 sq m, proportion is 12.6%

If the room is not exclusively for business (e.g. a spare bedroom that doubles as an office), reduce the proportion to reflect the split. A room used 70% for business and 30% as a guest bedroom would be 70% of the room's proportion.

Step 2: Time proportion

Calculate what proportion of the week the room is used for business.

• Total hours in a week: 168
• Business hours: 40 (8 hours x 5 days)
• Time proportion: 40/168 = 23.8%

Some people use a simpler approach: business days vs total days. Working 5 days out of 7 gives 71.4%. HMRC accepts either method as long as it is reasonable and consistent.

Step 3: Combine proportions

Multiply each bill by both proportions:

Claimable amount = Annual bill x Space proportion x Time proportion

For broadband and phone, many people use just the time proportion (since the whole house benefits from the connection). HMRC accepts this where the approach is reasonable.

Worked Example: Actual Cost Calculation

Scenario: Maria is a self-employed graphic designer working from a dedicated home office.

Plus broadband and phone (time proportion only):

Total actual costs claim: £392.88

Compare to simplified expenses at £26/month (101+ hours): £312/year. In this case, actual costs are higher by £80.88. At the higher rate of tax (40%), that is an extra £32.35 in Maria's pocket.

For someone with higher household bills, a larger office proportion, or a more expensive area, the difference can be several hundred pounds.

Working From Home as a Limited Company Director

Limited company directors have the most flexibility because they can combine methods. Here is how to maximise your claim.

The Combination Approach

As a director, your company can:

1. Pay you the £6/week flat rate (£312/year, tax-free, no P11D)
2. Reimburse actual additional costs above the flat rate (tax-free if properly documented)

Alternatively, if you do not want to calculate actual costs, just take the £6/week and move on. But if your home office costs are significant, documenting actual costs can be worthwhile.

How to Document It Properly

For your company to reimburse actual home working costs:

1. Calculate your costs using the space and time method above
2. Prepare a written calculation showing each bill, the proportions used, and the total
3. Have the company reimburse you via expense claim (not salary)
4. Keep copies of all bills and your calculation for at least 6 years
5. Update the calculation annually when bills change

The reimbursement is a deductible business expense for the company and tax-free income for you, provided the amount is reasonable and properly documented.

What About Paying Rent to Yourself?

Your company can pay you rent for using your home as business premises. This is separate from the expense reimbursement approach and works differently:

• The rent must be at a commercial rate for the space
• You declare the rent as property income on your Self Assessment
• The company deducts the rent as a business expense
• You can offset allowable expenses against the rental income (wear and tear, repairs, insurance on the room)

For most directors working from a spare room, the expense reimbursement approach (Method 3 above) is simpler and more tax-efficient. Paying yourself rent only makes sense if you have a large, dedicated workspace and want to formalise the arrangement.

Worked Example: Director Combination Claim

Scenario: Tom is the sole director of a consultancy, working from home 4 days per week.

Company pays Tom £6/week: £312/year (tax-free, no records needed)

Company also reimburses actual costs above the flat rate:

Since the £312 flat rate already exceeds the actual costs calculation in this case, Tom should just take the flat rate. But if his bills were higher (larger house, more expensive area), the actual costs method would overtake.

Key insight: Always calculate both. If actual costs are higher, claim those instead of (or in addition to) the flat rate. If the flat rate is higher, just take the flat rate and save yourself the paperwork.

Detailed Worked Examples: Choosing the Right Method

These four examples cover the most common scenarios. Each calculates the claim under every available method so you can see exactly where the crossover points are.

Example 1: Part-Time Employee Working From Home 2 Days Per Week

Profile: Sarah is an employee on a £45,000 salary (higher rate taxpayer). She works from home every Tuesday and Wednesday from a corner of her living room. Her employer provides an office she could use.

Result: Sarah claims £312 via P87 or Self Assessment and saves £124.80 per year in tax. Since she is an employee, actual costs are not available. The flat rate is straightforward and requires no receipts.

Example 2: Full-Time Self-Employed Consultant With Dedicated Office

Profile: James runs a management consultancy from a converted spare bedroom. He works 45 hours per week from home and his home is a 3-bed semi in the Midlands.

Actual costs breakdown:

Result: Actual costs (£745.80) beat simplified expenses (£312) by £433.80. At the basic rate (20%), that saves James an extra £86.76. At the higher rate (40%), an extra £173.52. James should use actual costs.

Example 3: Limited Company Director, Combination Claim

Profile: Priya is the sole director of a digital marketing Ltd company. She works from home 4 days per week from a dedicated study.

Step 1: Company pays Priya the £6/week flat rate

• £312/year, tax-free, no documentation needed

Step 2: Company also reimburses documented actual costs

Since £312 (flat rate) already exceeds the actual costs of £237.59, Priya should just take the flat rate. The actual costs calculation is not worth the paperwork in her case.

But what if Priya lived in London with higher bills? Council tax of £3,200, electricity £2,400, gas £1,800. Her actual costs would be £423.10, beating the flat rate by £111.10. In that case, claiming actual costs on top of the flat rate makes sense.

Example 4: Self-Employed Part-Timer Working From Kitchen Table

Profile: Alex is a freelance writer who works 30 hours per month from a shared kitchen/dining area. No dedicated office.

Result: Simplified expenses win. Alex claims £120 per year. With no dedicated room and minimal hours, the actual costs calculation produces a smaller number. Simplified expenses are the clear choice.

Flat Rate vs Actual Costs: When Does Each Method Win?

Here is a comparison across different scenarios to help you decide.

Rules of thumb:

• If your annual household bills (electricity, gas, water, council tax, insurance, broadband) total less than £4,000, the flat rate usually wins
• If they total more than £6,000 and you have a dedicated office taking up 10%+ of your home, actual costs usually win
• If you work from home less than 3 days per week, the flat rate almost always wins
• Directors should always calculate both before deciding

Record-Keeping Requirements

How much record-keeping you need depends on which method you choose.

Flat Rate (£6/week)

Minimal records needed:

• A note of which weeks you worked from home
• If employed, evidence that your employer requires home working (email, contract clause, company policy)
• That is it. No bills, no measurements, no calculations.

Simplified Expenses (Self-Employed)

Moderate records needed:

• A monthly log of hours worked from home
• The log should show the total business hours per month
• Keep the log for at least 5 years after the 31 January filing deadline

Actual Costs

Detailed records needed:

• Copies of all household bills claimed (keep for 6 years)
• Room measurements and total home measurements
• Written calculation showing how you arrived at your business proportion
• If your arrangement changes (you move office, change hours), update the calculation
• For limited companies, a formal expense claim submitted to the company

HMRC rarely challenges flat rate claims. Actual costs claims are more likely to be queried during an enquiry, but a clear, reasonable calculation with supporting bills is almost always accepted.

Special Situations

Hybrid Working Arrangements

If you split your time between home and an office, you can still claim for the weeks or months you work from home. The £6/week flat rate applies for any week you work from home, even if you also attend an office on other days that week. For actual costs, calculate your time proportion based on the hours you actually work from home, not total working hours.

Example: You work from home Monday to Wednesday and attend the office Thursday and Friday. Your home working hours are 24 per week out of 40 total working hours. For the time proportion calculation, use 24/168 = 14.3% (proportion of all hours in the week), not 24/40.

Multiple People Working From Home in the Same Household

If two people in the same household both work from home, each can claim separately. However, you cannot both claim 100% of the same bills. Each person should calculate their own proportion based on their workspace and hours.

If you share an office room, split the space proportion between you. If you use separate rooms, each calculates their own space proportion independently. Bills are shared proportionally based on each person's individual calculation.

Example: Partners Alex and Sam both work from home. Alex uses a dedicated study (12 sq m, 40 hrs/week). Sam uses a corner of the living room (estimated 4 sq m of a 20 sq m room, 30 hrs/week). Each calculates their own proportion of shared household bills independently.

Moving Partway Through the Tax Year

If you move house during the tax year, you need to pro-rate your claim. Calculate the actual costs for each property based on the months you lived there. Your space and time proportions may be different in each home.

For the flat rate, no adjustment is needed. You can claim £6 for every week you worked from home, regardless of which home you were in.

For simplified expenses, keep a separate hours log for each property if your working pattern changed with the move.

Working From Home Temporarily

If you work from home temporarily (for example, while your office is being refurbished), you can still claim for the period of home working. The £6/week flat rate is particularly useful here because it requires no calculation of actual costs. Just claim for the weeks you worked from home.

For employees, temporary home working still requires that your employer directed you to work from home. Choosing to work from home because you are waiting for office furniture does not qualify.

Capital Allowances for Home Office Equipment

In addition to running costs, you can claim capital allowances on equipment purchased for your home office. This includes:

• Computer, laptop, or tablet used for business
• Monitor, keyboard, mouse
• Desk and office chair
• Printer, scanner
• Shelving and filing cabinets
• Business-specific software

If the item is used exclusively for business, claim 100% under the Annual Investment Allowance (AIA). If it is dual-purpose (personal and business), claim only the business-use proportion.

Example: You buy a £600 laptop used 80% for business. Claim £480 as a capital allowance. This is separate from and in addition to your home working costs claim.

For limited company directors, the company buys the equipment directly and claims the full cost (or business proportion) as a deductible expense. The director does not need to claim personally.

Common Mistakes to Avoid

Claiming when you choose to work from home, not required to. Employees must work from home as part of their duties, not simply because they prefer it. If your employer provides a desk and you choose to stay home, you do not qualify for the employee flat rate.

Using the wrong method for your status. Self-employed individuals should use simplified expenses or actual costs. Employees should use the £6/week flat rate. Directors can use either or both. Do not mix up the methods.

Forgetting to claim at all. This is the most expensive mistake. The relief is not applied automatically. You must actively claim it, whether through your tax return, form P87, or your company accounts.

Over-claiming on actual costs. Your calculation must be reasonable. Claiming 50% of your household bills when your office is a corner of the living room will not hold up. Be honest with your proportions.

Not updating calculations when circumstances change. If you move home, change your office setup, or significantly change your working hours, recalculate your proportions. Using a stale calculation from three years ago is a risk.

Claiming mortgage interest without understanding the CGT implications. Self-employed individuals can claim mortgage interest, but it may create a Capital Gains Tax liability when you sell. For most people, the tax relief saved is not worth the potential CGT cost. Stick to running costs unless you are certain.

How to Claim: Step-by-Step for Each Status

Self-Employed

1. Choose your method: simplified expenses or actual costs
2. Keep records throughout the year (hours log or bills and calculations)
3. On your Self Assessment return, enter the total under "premises costs" or "use of home as office"
4. File by 31 January (online) or 31 October (paper)

Employee

1. Check that your employer requires you to work from home
2. Ask your employer to pay you £6/week as an expense. Most employers will do this.
3. If they refuse, claim via form P87 (for claims under £2,500) or Self Assessment (for claims over £2,500 or if you already file a return)
4. HMRC will adjust your tax code to give you the relief going forward

Limited Company Director

1. Decide whether to use the flat rate, actual costs, or both
2. For the flat rate: have your company pay you £6/week as an expense reimbursement
3. For actual costs: prepare a written calculation, submit as an expense claim to your company, keep all supporting bills
4. The company records both as deductible business expenses
5. Neither appears on your P11D

What Changed in 2025/26 and What to Watch For

The £6/week flat rate has remained unchanged since April 2020, when HMRC increased it from £4/week. There is no indication it will increase for 2025/26 or 2026/27.

The simplified expenses rates for self-employed (£10/£18/£26 per month) have also remained static for several years. These rates were originally set to reflect average additional costs and have not kept pace with energy price increases since 2022.

This means the gap between flat rates and actual costs has widened. If you are paying significantly more for energy than you were in 2019/20, actual costs are more likely to beat the flat rate than they were when these rates were set. This is especially true for homes with electric heating, heat pumps, or above-average energy consumption.

Making Tax Digital (MTD) impact: From April 2026, self-employed individuals earning over £50,000 must keep digital records under Making Tax Digital. If you use accounting software that already tracks your expenses, calculating actual home working costs becomes much easier. The software can store your proportions and automatically calculate the business portion of each bill as you enter it.

Energy price changes: If your energy costs have risen significantly, recalculate your actual costs even if you previously decided the flat rate was better. A 40% increase in energy bills can shift the balance from flat rate to actual costs, particularly for full-time home workers with dedicated offices.

How AccountsOS Helps Track Home Office Expenses

Managing home working expenses becomes effortless with AccountsOS. Our AI-powered platform helps you maximise your tax relief whilst staying fully compliant.

Automated expense tracking: Simply photograph household bills, and AccountsOS automatically categorises them and calculates your claimable proportion based on your home office setup.

Smart calculations: Tell AccountsOS about your workspace once, including room size, hours worked, and total home size, and it applies the correct proportions to every bill automatically. No spreadsheets, no manual calculations.

Both methods compared: AccountsOS calculates your relief under both the flat rate and actual costs method, showing you which saves more money. Switch between methods year by year as your circumstances change.

HMRC-ready records: When Self Assessment time arrives, AccountsOS generates a complete expense summary with all supporting calculations. Your records are stored securely for six years, ready if HMRC ever enquires.

Quarterly reminders: Never miss a bill. AccountsOS prompts you when it is time to log household expenses, ensuring you claim every pound you are entitled to.

The platform also tracks your business mileage (use our mileage calculator), equipment purchases, and other allowable business expenses, giving you a complete picture of your tax position throughout the year.

Frequently Asked Questions

Can I claim working from home tax relief if I only work from home one day per week?

Yes, you can claim the £6/week flat rate for any week you work from home, regardless of how many days. Even one day per week qualifies for the employee flat rate. Self-employed individuals using simplified expenses need to total their monthly hours and use the appropriate band (25-50 hours, 51-100, or 101+). One day per week is roughly 32 hours per month, which falls in the £10/month band.

Do I need permission from my employer to claim?

For employed workers, your employer must require you to work from home. You cannot claim if it is purely your choice when an office is available. You do not need written permission, but HMRC may check with your employer if queried. Keep emails or company policies that demonstrate home working is a requirement or an agreed arrangement.

Can I claim for previous tax years?

Yes. You can amend your Self Assessment return for up to four previous tax years. If you have been working from home but have not claimed, you can go back and claim for 2022/23, 2023/24, and 2024/25 in addition to the current year. For employees who do not file Self Assessment, use form P87 to make a backdated claim.

What if I am both employed and self-employed?

You can claim for both sources of income separately. Use the flat rate through your employment (via P87 or your tax code) and claim either simplified expenses or actual costs for your self-employed income on your Self Assessment return. Make sure you do not double-count the same hours or the same bills across both claims.

Does claiming home office expenses affect my Capital Gains Tax?

Claiming running costs (electricity, heating, water, broadband, council tax, insurance) does not create a CGT liability. These are treated as expenses of living in your home, not as evidence of business premises. However, claiming mortgage interest, rent, or any expense that implies exclusive business use of part of your home can create a CGT liability on that portion when you sell. For most home workers, sticking to running costs is the safer option.

Can I claim if I rent my home?

Self-employed individuals can claim a proportion of rent using the actual costs method. Calculate the business use proportion of your rent using the space and time method. For limited company directors, the company cannot directly reimburse your rent as a tax-free expense, but other household running costs can be reimbursed. Employed workers cannot claim rent, only the £6/week flat rate.

How does HMRC check working from home claims?

HMRC may request evidence during an enquiry, which can happen up to six years after the tax year. For flat rate claims, they might confirm home working arrangements with your employer. For actual costs, they want to see bills, your calculation methodology, and room measurements. Reasonable claims with proper records are rarely challenged. The key is consistency: use the same method throughout the tax year and keep your calculations logical.

Can I claim for furniture and equipment as well?

Yes, but separately from home working relief. Office furniture (desk, chair, shelving), computers, monitors, and other equipment are either capital allowances or general business expenses. Claim the full cost for items used exclusively for business, or a business-use proportion for dual-purpose items. These claims are in addition to your home running costs. See our full guide to allowable business expenses.

What if I move house during the tax year?

Recalculate your proportions from the date you move. You may have different room sizes, different household bills, or a different working arrangement in your new home. For the flat rate, no adjustment is needed as long as you continue to work from home. For actual costs, pro-rate each property based on the months you lived there.

Can my company pay more than £6 per week without tax implications?

Yes, but only if you can document that your actual additional costs exceed £6 per week. The £6/week is the amount that can be paid without any evidence. If you prepare a calculation showing your actual additional costs are, say, £10 per week, the company can pay up to that amount tax-free. The excess above £6 must be supported by a written calculation and copies of bills.

Summary: What to Do Next

1. Identify your status: employee, self-employed, or company director
2. Calculate your claim under each available method using the tables and examples above
3. Choose the method that gives you the highest relief (or combine methods if you are a director)
4. Set up record-keeping appropriate to your chosen method
5. Make your claim via Self Assessment, form P87, or your company accounts

Working from home creates genuine additional costs, and HMRC recognises this through tax relief. Whether you choose the simple flat rate or invest time in calculating actual costs, you are entitled to reduce your tax bill. Do not leave money on the table.

Start tracking your home office expenses with AccountsOS today and ensure you claim every pound of tax relief you deserve.