Quick answer:
If you’re self-employed and work from home, you can claim a portion of your household running costs as an allowable expense using either HMRC’s simplified flat-rate method (based on hours worked from home each month) or the actual-costs method (apportioning bills like heating, electricity and broadband by business use).
This is one of the most commonly missed deductions. Here’s how to claim it correctly.
What can you claim for working from home?
You can claim the business proportion of costs such as heating, electricity, council tax, rent or mortgage interest, broadband and phone. The key word is *proportion*, only the part relating to your business use qualifies. This sits within your wider allowable expenses for the self-employed.
Method 1: The simplified flat rate
HMRC’s simplified expenses method lets you claim a flat monthly amount based on the hours you work from home, with no need to calculate actual bill proportions. The more hours per month, the higher the flat rate band. It’s quick and low-admin, ideal if you don’t want to apportion bills.
Method 2: Actual costs
Alternatively, you can claim the actual business proportion of your household costs, usually apportioned by the number of rooms used for business and the time they’re used. This can be more generous if you have significant home-working costs, but it requires more record-keeping.
Which method should you use?
The flat rate is simpler; actual costs can be worth more if your bills are high or you use a dedicated workspace heavily. Many people calculate both once and use whichever gives the better result. Either way, keep the records to back it up, see digital record keeping for HMRC.
How does this work under MTD?
Use-of-home costs are reported within your allowable expenses in your quarterly updates and finalised at the final declaration. Recording them consistently each period keeps your figures clean, see what goes in an MTD quarterly update and avoid the trap of forgetting them in bookkeeping mistakes sole traders make.
How CleanBooks AI helps you claim it
CleanBooks AI helps you capture home-working costs consistently, with Keeva™ categorising relevant expenses and keeping them in your digital records. Because your tax estimate is live, you see the effect of claiming use-of-home on your bottom line straight away, see real-time tax estimates.
Don’t miss money you’re owed. Track home-working costs with CleanBooks AI free, 6 months free, no credit card.
