One of the really great things about being self-employed is the opportunity to work from home. It’s this sort of flexibility that inspires people to start their own businesses in the first place; it’s especially good for those who don’t find a nine-to-five office role suitable, such as stay-at-home parents or those living with disabilities.

There’s a variety of expenses that you can claim when working from home:

• Office equipment - Computers, furniture, and other necessary equipment for your professional duties.
• Renting part of your home to your company is still possible under strict HMRC rules for limited companies.
• Mortgage payments, utilities, and council tax - Proportional costs may still be claimed if you are self-employed or your limited company rents part of your home. Employees can no longer claim a tax deduction for these costs.
• Repairs - Claim back repairs on your property if they are directly related to, and necessary for, your business.
• Internet connection - Can be part of the rental calculation if you have a rental agreement with your business.
• Business mobile - Set up a contract between your company and the service provider to claim full relief on the cost of the phone and its use.
• Simplified expenses for sole traders - Flat rate for allowable expenses based on the number of hours you work from home each month.

Employees can no longer claim a tax deduction from HMRC for homeworking costs, including the £6 flat rate relief, from 6 April 2026 onward. Any advice should focus on reimbursements from employers rather than personal claims.

While many people work from home, only self-employed individuals or limited companies can claim homeworking expenses. Employees cannot claim these expenses from HMRC from 6 April 2026.

I use the office in my house to work in – what can I claim?

Depending on the work you do, you might be able to claim expenses back for using your home as an office, either by claiming for office equipment like computers and furniture or even renting part of your home to your company. HMRC rules are, however, complex. We’ve broken them down so it’s easy to see what you may or may not include in your expenses when working from home.

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Claiming home office expenses

One of the benefits of running your own business is that you can choose who you work for and where you work from. If you use a room in your home as office space for running your business, you may be entitled to claim certain costs as a business expense.

As always, there are rules: you must be able to prove that you regularly spend time doing your job in this office space, so you can’t just use your home office for a small bit of administration while the majority of your work is done on-site or at client offices.

Purchases of equipment that’s necessary and essential for your professional duties will receive tax relief. You may also claim reasonable relief towards the cost of equipping/furnishing an office (for example chairs or bookcases).

HMRC rules over what you can claim expenses for are complex and are different for limited companies and sole traders.

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How much can I claim as expenses through my limited company when working from home?

If you’re a limited company, then there are two ways of working out your home office expenses – using HMRC’s flat rate amount or creating a rental agreement between you and your limited company.

HMRC flat rate for limited companies

For limited companies, the easiest way to account for home office costs is either through a formal rental agreement or HMRC’s simplified expenses method, which lets you claim a flat rate based on the number of hours you work from home each month. Receipts aren’t required for simplified expenses.

Employees cannot claim the old £6/week allowance from HMRC from 6 April 2026. Any homeworking reimbursements must come directly from the employer.

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Renting your home office to your business

If you run your business through a limited company, you may be able to rent part of your home to your company and claim the associated costs as business expenses. By following the rules correctly, this can provide a tax-efficient way to cover a proportion of your home costs. The old £312 flat rate is no longer applicable.

Rental agreement with your limited company

To claim home office expenses via a rental arrangement, you must set up a formal rental agreement between yourself (as the homeowner) and your limited company. Without this agreement, HMRC could treat any rent paid as additional salary, which would be subject to Income Tax and National Insurance.

A formal rental agreement allows your limited company to deduct rental payments from your company’s pre-tax profit, reducing Corporation Tax on the company.

When you prepare your rental agreement, you need to keep the following in mind:

• Rent must be realistic and on an ‘arm’s length’ basis - neither party should be disadvantaged or overly advantaged. 
• Be cautious if a room is solely dedicated to business use, as this can affect property sale or Capital Gains considerations.
• A formal agreement must be signed by both parties.
• Consider periodic reviews of the rent, for example, annually.

Any income you receive as an individual must be included on your personal tax return (Self Assessment) and any profit remaining after expenses will be subject to Income Tax at your normal rate, which may make this a less tax-efficient option for you personally.

Your rental agreement can be used to cover the proportional costs of your home office space. Allowable expenses depend on your circumstances, but typically include mortgage interest, utilities, and council tax based on the proportion of your home used for business purposes.

How to calculate your allowable rental expenses

When it comes to ensuring a reasonable amount of rent, you need to calculate how much space is used by your business. A practical way to do this is to calculate your monthly outgoings for expenses you are looking to claim, then divide that by the percentage of your rooms being used for business purposes (which should usually be one room).

For example, if you have a house with seven rooms, an office should take up one room, so you calculate the amount of rent based on 1/7th of the eligible expenses. If your office was in use on average seven hours a day you would then calculate 7/24th of the amount, and this is what you would include in the agreement as the rent amount.

However, if you decide to sell your property you may need to pay Capital Gains Tax which needs to be included on your Self Assessment. This is because the ‘business’ part of the sale will not qualify for Private Residence Tax Relief. This is due to your home no longer being fully exempt because an area is being used for business purposes. Capital Gains Tax is applied to any increase in the value of the office area that may have resulted from the company’s occupation of it.

This means that you need to think very carefully about whether a rental agreement is the right decision for you. If you decide to sell your house, you could face a Capital Gains Tax bill on the office part as this will not be covered by the Private Residence Relief.

The calculation for this can be complicated and the Capital Gains Tax liability could be reduced if the office is used by you for non-business use outside office hours. It’s likely you’ll need specialist advice to calculate the amount of Capital Gains Tax you owe to ensure you follow HMRC’s rules.

Claiming for multiple rooms?

You’ll need to provide a very good reason for using more than one room for business purposes and evidence that the private use of this space is secondary to the business use. A legitimate situation might be a photography studio with an office and a dark room – remember that if you sell the property, Capital Gains Tax may be payable.

If you do use multiple rooms for business purposes then you should prepare a detailed calculation with supporting evidence. This should follow the process highlighted above. You may even go further and apportion expenses based on the square metres in use.

You may also claim back repairs on your property if they are directly related to, and necessary for, your business.

What about home office expenses if I’m a Sole Trader?

If you’re a sole trader, then the rules are different – you have two choices, you can choose to claim simplified expenses for the self-employed or you can work out your actual costs by calculating the proportion of personal and business use for your home, e.g. the proportion of utility bill expenses incurred by your business. To ensure you're accurately accounting for your overall expenses and tax, use our self-employed tax calculator to estimate your tax obligations.

The government’s website www.gov.uk has a simplified expenses checker to help you decide which method is best for you.

Simplified expenses for the self-employed mean you claim a flat rate for your allowable expenses based on the number of hours you work from home each month. You’ll need to work a minimum of 25 hours a month from home to qualify.

If you use simplified expenses, then don’t forget you can also claim the business proportion of your telephone or internet expenses as these aren’t included in the flat rate allowance.

Use of the Internet when working from home

In order for expenses to fall within the “wholly and necessarily” rules, the internet connection must be purchased in the name of your limited company. You normally can’t claim any internet costs as this will include personal use. However, if you work at home and have a rental agreement with your business, this expense can be part of the rental calculation.

The exception to this is if there is a separate broadband line that runs into the office part of your home to provide internet access solely to that area – only then can you claim all of the internet costs for the separate line.

How do I claim for business mobile telephone calls?

To claim full relief on your mobile telephone bills, you’ll need to ensure that a contract is set up between your company and the service provider. This way you can gain full tax relief on the cost of the phone and its use. Any personal calls on the mobile are treated as a tax-free benefit in kind, so are a consequence of an allowable business expense and will encounter no tax – or need reporting on your P11D. 

If you take out a mobile phone contract in the name of your business, the monthly bill is treated as a business expense.

Example for 2026/27

If your limited company pays for a mobile phone and contract costing £1,000 in the year:

• The full £1,000 is an allowable business expense in your accounts.
• This reduces your company’s taxable profit.
• With a Corporation Tax rate of 25% for 2026/27, the approximate tax saving would be: £1,000 × 25% = £250.

(If your profits are below £50,000 and you qualify for the small profits rate at 19%, the saving would be about £190.)

For sole traders, the business proportion of mobile costs reduces your sole trade profits, thus lowering your personal tax bill. The personal use of the phone is not taxable, so does not need to be included in your Self Assessment.

The one caveat with signing a phone contract in the name of your company is that you’ll probably have to use one of your phone provider’s business tariffs, which may prove slightly more expensive – but any increase in cost will probably be covered by the tax savings.

We don’t recommend claiming for business use on a personal mobile contract as none of the tariff can be claimed on the basis of paying for minutes, beca

Summary

The key question to ask yourself at every stage is: are these expenses genuinely for business purposes? And can I prove it?

As ever with such issues, if you’ve got any doubts, a qualified accountant will be able to help. All Crunch customers get unlimited access to a team of expert accountants who can provide the answers.

Need further advice?

Crunch are always here to help our clients. If you’re a new client, then get in touch with us on 0333 311 0800. For Crunch paid subscription clients, your client managers are on-hand to answer any questions you may have. Contact them today on support@crunch.co.uk or 0333 311 8001.