Scope: For sole traders and eligible non-corporate partnerships using home for business. Employee homeworking relief is different and unavailable for 2026 to 2027.
The short answer
You can use a reasonable method to claim the business share of qualifying actual home costs, excluding private use.
Alternatively, eligible businesses can use simplified expenses based on hours worked at home each month.
Compare the two methods and keep the records supporting the one used. Simplified homeworking rates do not replace separately supportable business telephone and internet costs.
Actual-cost method
HMRC lists costs that may include heating, electricity, Council Tax, mortgage interest or rent, and internet and telephone use. Only the business portion is allowable.
A reasonable apportionment may consider rooms, floor area, time used and intensity of use. No single formula fits every home. A room used as an office for three days and family space for four days requires a time adjustment; a bill serving the whole property needs a spatial or usage basis as well.
Document why the method is reasonable. Do not claim mortgage capital repayments, personal calls or a private proportion.
Simplified-expense method
Simplified expenses use flat monthly rates based on business hours worked at home. They are available to sole traders and partnerships with no company partner, not limited companies.
Keep monthly hours. At the year end, apply HMRC’s live band for each month and total the result. Months below the minimum hours do not attract a homeworking flat-rate amount.
The flat rate covers household running costs represented by the scheme. HMRC says business telephone and internet costs can be claimed separately by working out the actual business proportion.
Compare before choosing
For actual costs, prepare:
- annual qualifying bills;
- business-use rooms or floor area;
- time spent on business;
- private-use adjustment; and
- calculation by cost category.
For simplified expenses, prepare monthly business hours and apply the HMRC bands. Compare the deductions, but also consider the work required to support them. The larger number is not defensible if its assumptions are weak.
Worked method illustration
Suppose one of four comparable rooms is used for business, but only half the time. A starting allocation for a whole-home qualifying cost might be one quarter, then one half of that allocated amount. The nature of each bill may justify a different basis.
This is an apportionment illustration, not an HMRC-prescribed formula or a personal calculation.
Capital and property considerations
Repairs to the work area can differ from improvements creating a new asset. Equipment may follow ordinary expense or capital rules depending on the accounting basis and item. Exclusive business use of part of a home can also have consequences beyond the annual expense claim, so avoid describing a room inaccurately.
Rent paid for business premises and rent for a private home are not interchangeable. Claim only the supportable business portion under the applicable rules.
Records to keep
- bills and payment evidence;
- monthly homeworking hours;
- floor plan or room calculation where relevant;
- calendar or work logs;
- telephone and internet business-use schedule;
- actual-versus-simplified comparison; and
- annual return calculation.
Common mistakes
- Applying the employee flat amount to a sole trade.
- Claiming all rent or utilities.
- Ignoring private use of an office room.
- Claiming actual household costs and simplified home rates together.
- Including telephone costs twice.
- Using monthly hours without retaining a log.
What to do next
- Confirm the claimant is eligible for simplified expenses.
- Gather bills and monthly business hours.
- Calculate a reasonable actual-cost business share.
- Calculate the simplified amount from HMRC’s current bands.
- Choose one method and retain the comparison.
- Enter it consistently in the business records and return.