If you run your business from home, you’re entitled to claim a proportion of your household running costs as business expenses. But what exactly can you claim — and how do you do it properly?
This guide breaks it down clearly, so you can claim what you’re entitled to without falling foul of HMRC.
The Two Main Methods
HMRC allows you to claim the cost of using your home for business in one of two ways:
1. Simplified Expenses (Flat Rate)
If you work from home at least 25 hours a month, you can use HMRC’s flat rate. It’s simple and doesn’t require you to apportion bills.
| Hours worked per month | Monthly flat rate |
| 25-50 | £10 |
| 51-100 | £18 |
| 101+ | £26 |
This rate covers heat, light and power only — not things like internet, phone, or council tax. You can still claim actual costs separately for items not included (see below).
It’s quick and easy and there’s no need to keep bills or do calculations, but… it can under claim compared to actual costs and it’s not available if you work fewer than 25 hours per month from home.
2. Actual Costs (Apportioned Bills)
This method involves calculating a fair proportion of your home expenses based on how much and how often you use your home for business. For some items, that might be worked out according to the space within the house that’s used for business and the amount of time it’s used. For others, it might be a more straightforward percentage of the overall cost.
You could include:
- Rent or mortgage interest (not capital repayment)
- Council tax
- Utilities: gas, electricity, water
- Broadband and telephone (business proportion only)
- Buildings and contents insurance
- Repairs and maintenance (if relevant to the space used)
You don’t need to be exact down to the penny, but your method must be reasonable and consistent. HMRC doesn’t prescribe a formula, but you should be able to explain and evidence how you arrived at your figures.
For examples, if you have 5 rooms and use 1 for business 8 hours a day out of 24, that’s:
- 1/5 for space × 1/3 for time = 6.7% of total costs claimable
Phone and Internet
You can claim the business portion of your mobile and broadband. This might be:
- A fixed percentage (e.g. 50% if you use it equally for business and personal)
- Based on actual usage, if you keep records
Equipment and Office Furniture
Things like desks, chairs, printers and computers can be claimed as capital allowances or business expenses, provided they’re used solely for business.
If there’s dual use (e.g. your laptop is also for Netflix), you’ll need to make a reasonable adjustment for personal use.
What You Can’t Claim
There are some common expenses that HMRC won’t allow you to deduct. You can’t claim the full cost of your rent or mortgage payments — only the business proportion of mortgage interest if using the actual costs method. Personal expenses such as home décor, Netflix subscriptions, or buying the property itself are also off-limits. Similarly, mortgage capital repayments are not deductible, even if you work from home.
Keep Good Records
No matter which method you use — flat rate or actual costs — it’s important to keep clear records. Save copies of relevant bills, note down how you’ve calculated the business proportion, and keep evidence that you actually use the space for business (such as emails, calendar bookings, or photos). If HMRC ever asks, you’ll need to be able to justify your claims.
Need Help?
If you’re unsure what’s reasonable to claim, or whether you should be using simplified expenses or actual costs, it’s worth a quick chat with your bookkeeper or accountant. A small tweak in how you claim could save you hundreds over the course of a year.
