Working From Home Expenses for Self-Employed People: 2026/27

Updated for 2026/27. A self-employed person can claim the business proportion of working-from-home costs or, where eligible, HMRC’s simplified flat rates. Employees follow different and narrower rules, so first identify whether the work relates to a sole trade, partnership or employment.

Two methods for sole traders

You can normally choose between:

• Actual-cost method: calculate a reasonable business share of household expenses
• Simplified expenses: use HMRC’s monthly flat rate based on hours worked at home

Compare both. The flat rate is simpler but may be lower than a well-supported actual-cost claim. You cannot claim the same cost twice.

2026/27 simplified working-from-home rates

• 25 to 50 hours a month: £10
• 51 to 100 hours a month: £18
• 101 hours or more a month: £26

Hours below 25 in a month do not qualify for that month’s flat rate. The allowance covers certain household running costs, but business telephone calls, business broadband use and other direct costs may be claimed separately where the rules allow.

Actual household costs

Potential costs include:

• Heating and electricity
• Council Tax
• Rent
• Mortgage interest—but not capital repayment
• Home insurance
• Broadband and telephone
• Cleaning and repairs related to the work area

Only the business proportion is deductible. Capital improvements and private expenditure follow separate rules.

How to apportion actual costs

Use a reasonable basis reflecting the facts. Common factors are:

• Number and size of rooms
• Time each space is used for business
• Actual usage, such as metered electricity
• Whether the cost relates directly to the work area

For example, if one of five comparable rooms is used for business for half of the relevant time, a starting apportionment might be 1/10 of shared costs. Adjust where kitchens, bathrooms or room sizes make that unreasonable.

Example calculation

Priya has annual shared household costs of £12,000. One of six comparable rooms is used for business 60% of the time. A starting business share is £12,000 × 1/6 × 60% = £1,200. She separately reviews direct broadband and repair costs and keeps the calculation with bills.

Exclusive business use and Capital Gains Tax

A room used exclusively for business can restrict the main-residence Capital Gains Tax relief when the home is sold. Mixed or occasional private use may avoid exclusive-use treatment, but the facts must be genuine. The working-from-home expense claim alone does not automatically create a CGT charge.

Business rates and planning

Substantial client visits, structural alterations, staff or exclusive commercial use can raise business-rates, planning, lease, mortgage and insurance issues. Check local authority and contract requirements before changing the use of the home.

Renting from yourself

A sole trader cannot create a deductible rent by paying themselves, because the person and business are the same. A company can sometimes pay rent to a director under a genuine licence agreement, but this creates personal property income and needs commercial, mortgage, insurance and CGT review.

Limited company directors and employees

An employee can claim or receive tax-free homeworking costs only under specific conditions, generally where homeworking is required rather than chosen. The employer may reimburse qualifying additional household costs or use the approved weekly amount where conditions are met. Ordinary rent, mortgage interest and council tax are not generally employee deductions.

Do not apply sole-trader simplified expenses to a director’s company. The company and individual are separate legal persons.

Telephone and broadband

Claim the identifiable business part of a mixed personal contract. A new connection taken solely for business may be wholly deductible, while an existing fixed personal package may have little or no additional cost. Itemised calls and usage evidence strengthen the claim.

Furniture and equipment

Desks, chairs, computers and monitors used for the trade may be deductible under the cash basis or capital-allowance rules, subject to private-use adjustment. These are separate from household running costs and the simplified flat rate.

Records to keep

• Monthly hours worked at home when using simplified expenses
• Utility, rent, council tax, insurance and mortgage-interest statements
• Room and time apportionment calculation
• Telephone and broadband usage evidence
• Invoices for furniture, equipment and repairs
• Notes showing any private use of the work room

Choosing the method

1. Confirm your status: sole trader, partner, employee or company director.
2. Calculate eligible hours and the annual flat rate.
3. Calculate actual costs using a reasonable allocation.
4. Review CGT, business rates, lease and insurance risks.
5. Select one method for overlapping household costs.
6. Retain calculations and revisit them if usage changes.

Use HMRC’s official guidance on simplified working-from-home expenses and self-employed expenses. Our 2026/27 self-employed expense checklist covers other costs.

Frequently asked questions

Can I claim my full rent?

No. Only a reasonable business proportion is potentially allowable for a sole trader.

Can I claim both the flat rate and electricity?

Not for overlapping household costs. Direct business phone and other separately permitted costs can still be considered.

Does claiming home costs trigger business rates?

Not by itself. The nature and extent of actual business use determine the local-authority position.

This guide is general information. Company directors and exclusive business use require separate advice.