Working From Home Allowance: What Can You Claim?

Helen Emsell-Needham
Feb 4
3 min read

Working from home is now the norm for many business owners, freelancers and employees. But one question still comes up time and time again:

Can I claim tax relief for working from home — and if so, how?

The good news is yes, in many cases you can. However, the rules depend on whether you’re employed, self-employed, or running a limited company. Here’s a simple breakdown of how working from home allowances work and what you can claim.

What Is the Working From Home Allowance?

The working from home allowance is designed to cover the additional household costs you incur as a result of working from home — things like electricity, heating and internet usage.

HMRC allows either:

A flat-rate allowance, or
A claim based on actual costs (with evidence)

Which option applies to you depends on your business structure.

Employees: What Can You Claim?

If you’re an employee, you can claim working from home tax relief only if you are required to work from home — not just because it’s convenient.

Flat-Rate Allowance

HMRC allows a flat rate of £6 per week (£312 per year)
You don’t need to keep receipts
You claim tax relief, not the full £312 (so the actual saving depends on your tax rate)

For example:

Basic rate taxpayer → saves up to £62 per year
Higher rate taxpayer → saves up to £125 per year

Important Note

If your employer already reimburses your homeworking costs, you cannot claim the allowance again.

From 6 April 2026, employees will no longer be able to claim working from home allowances via their tax codes or self assessment. Instead, the only way to receive tax-free relief will be for employers to directly reimburse employees.

Self-Employed & Sole Traders

If you’re self-employed, you have two main options.

Option 1: Flat-Rate Method

HMRC allows a flat-rate claim based on the number of hours you work from home each month:

25–50 hours → £10 per month
51–100 hours → £18 per month
101+ hours → £26 per month

This method is simple and doesn’t require detailed calculations.

If the number of hours you work each month varies, you work out the allowance separately for each month, and the total of these is the amount you can claim.

Option 2: Actual Costs Method

Alternatively, you can claim a proportion of your actual household expenses, such as:

Rent or mortgage interest
Council tax
Gas and electricity
Water
Broadband

The claim is based on:

The number of rooms in your home
The amount of time those rooms are used for business

⚠️ This method can result in higher claims but requires careful calculations and keeping detailed records.

Limited Companies & Directors

If you run a limited company and work from home, there are a couple of common approaches.

Flat-Rate Allowance

Your company can pay you £6 per week (£312 per year) as a tax-free expense.

No receipts required
Simple and low risk
Deductible for corporation tax

Claiming Actual Costs

Your company can also reimburse you for a proportion of household expenses, but:

Calculations must be reasonable and consistent
Personal use must be excluded
Records should be kept

This approach can be more tax-efficient but should be handled carefully to avoid HMRC challenges.

What You Can’t Claim

Regardless of structure, you cannot claim:

Full rent or mortgage payments
Capital improvements to your home
Costs unrelated to business use

Also be aware that claiming a high proportion of home costs may have future implications, such as capital gains tax when selling your property.

So Which Method Is Best?

That depends on:

Your business structure
How much you work from home
The level of household costs involved

For many people, the flat-rate method is simple and effective. For others, especially full-time home workers, claiming actual costs may result in greater tax relief.

Need Help Deciding?

Working from home allowances are often missed, underclaimed, or claimed incorrectly — and HMRC rules vary depending on how your business is structured.

At Zenith Digital Accountants Ltd, we help: