Working from Home Allowance: What You Can Claim from HMRC

Let’s be honest: working from home can be a dream—no commute, your own coffee, and comfy slippers. But it’s not all cosy vibes and kettle breaks; running your business (or doing your job) from home means higher costs. Think electricity, heating, broadband and more. The good news? You may be able to claim tax relief on those extra costs.

In this week’s blog, we’re unpacking the working from home allowance—who can claim it, how it works, and what’s changed. Whether you’re self-employed, run a limited company, or are an employee who occasionally swaps the office for the kitchen table, there’s something here for you.

What Is the Working from Home Allowance?

The working from home allowance is a way to claim tax relief on some of the extra costs you incur when your home doubles as your office. This can cover things like:

• Heating and electricity

• Business calls

• Internet usage

• Rent or mortgage interest (in certain cases)

• Council tax and insurance (where relevant)

But how you claim it—and what you can claim—depends on your work setup and how you’re taxed.

Self-Employed: Your Home, Your Office

If you're self-employed, you’ve got two main options when it comes to claiming for working from home:

1. Simplified Expenses (Flat Rate Method)

This is HMRC’s easy-peasy method for people who work from home for at least 25 hours a month. You can claim a flat monthly rate, based on how many hours you work from home:

• 25–50 hours/month: £10/month

• 51–100 hours/month: £18/month

• 101+ hours/month: £26/month

This is claimed through your Self Assessment tax return. No receipts needed, just a good record of your working hours.

2. Actual Costs Method

If the flat rate doesn’t reflect your true expenses, you can claim a proportion of your actual household bills. This could include:

• Utility bills

• Rent or mortgage interest

• Council tax

• Repairs and maintenance (if they affect your workspace)

• Internet and phone usage

You’ll need to calculate what percentage of your home is used for work and how long you use it. It’s a bit more admin, but can give you a bigger deduction if your costs are higher.

Top Tip: Keep clear records, especially if you’re mixing personal and business use. A spreadsheet and digital copies of bills can save a lot of faff later.

Limited Company Directors: A Bit More Complex

If you run your business through a limited company, things get a little more technical. Here are your options:

1. Flat Rate Payment from the Company

Your company can pay you up to £6 per week (£312 per year) as a working from home allowance—no receipts required. This is considered a business expense for the company and isn’t taxable income for you.

2. Claim Actual Costs

Alternatively, the company can reimburse a share of your household costs, based on actual usage. You’ll need to provide detailed calculations and evidence—this can get fiddly and should be backed up with a home working agreement between you and the company.

Note: If the company reimburses more than £6/week, you'll need to show how you calculated it or risk HMRC treating the excess as a taxable benefit.

Employees: When Home Becomes the Office

Employees used to be able to claim a working from home tax relief if they had to work remotely because of COVID. That temporary measure ended on 6 April 2022, so what are the rules now?

Can Employees Still Claim Tax Relief?

Yes—but only if:

• Your employer requires you to work from home (not just allows it).

• You incur extra costs as a result (e.g. higher utility bills).

• Your employer doesn’t reimburse those costs.

If those conditions are met, you can claim:

• £6 per week (no evidence required), or

• The actual additional costs (with evidence)

You can claim via HMRC’s online service, or through your Self Assessment return if you already complete one.

What You Can’t Claim

If you choose to work from home (say, to avoid the commute), you won’t be eligible—even if you do spend more on your bills.

Also, you can’t claim tax relief if your employer already pays you the £6 per week or reimburses your home working costs.

How the Allowance Actually Saves You Money

So how does this translate into pounds and pence? Let’s say you’re a basic rate taxpayer (20%). If you claim the £6/week flat rate for the year (£312), you could get £62.40 back in tax relief. Not life-changing, but it might cover a few of those inflated energy bills.

If you claim higher actual expenses and you’re a higher rate taxpayer, the savings can be more substantial—provided you’ve got the paperwork to back it up.

Final Thoughts: Worth the Effort?

Claiming for working from home isn’t always straightforward, especially for limited companies or where you’re calculating actual costs. But with rising household expenses, even small claims can add up.

If you’re self-employed or a director, it’s definitely worth looking into the best method for your situation. For employees, make sure you’re eligible—and don’t forget the rules changed post-COVID.

Whether you're running a business from your kitchen table or just checking emails from the sofa, HMRC recognises that working from home has real costs. Understanding your options means you can make a claim with confidence—and maybe keep your next energy bill from taking you by surprise.