Working from home as a sole trader: how to claim use-of-home expenses
If you run your sole trader business from home, part of the cost of using your home may be allowable. The two common approaches are HMRC's simplified flat rate and a reasonable share of actual household costs.
The simplified flat rate
HMRC's simplified expenses rules let some self-employed people claim a flat amount for business use of home based on hours worked at home. The common shorthand is £6 per week, but you should always check the live GOV.UK table for the tax year and hours threshold.
The flat rate is simple because you do not have to split every household bill. The trade-off is that it may be lower than a carefully calculated actual-cost claim.
The actual cost method
The actual cost method means working out a fair business share of household bills. You might consider costs such as electricity, gas, broadband, rent, mortgage interest, council tax, or insurance where relevant. The claim must be reasonable and linked to actual business use.
How to calculate a fair share
A common approach is to look at rooms, time, and business use. For example, if one room out of five is used for business for part of the week, you might claim a time-adjusted share of relevant costs. Avoid claiming a room is exclusively business if it is also used privately, because exclusive business use can create wider tax complications.
Use the home office expenses calculator to compare a simplified flat-rate style estimate with a simple proportional method.
Broadband, phone, and software
If you use broadband or a phone for both business and personal reasons, claim only the business share. If you have a separate business contract or paid software subscription used only for work, the evidence is cleaner.
Renters vs homeowners
Renters often think about rent share, bills, and broadband. Homeowners may need to be more careful around mortgage interest, repairs, and exclusive room use. In both cases, the method should be consistent, reasonable, and written down.
Worked example
Suppose your relevant annual household costs are £4,800 and you calculate that 10% is a fair business share based on room use and time. The working-from-home expense would be £480. If a simplified flat-rate claim produced £312, the actual method may be better, but only if your records support the split.
Common mistakes
- Claiming all household bills when only part relates to business.
- Using a method you cannot explain later.
- Claiming both simplified flat rate and actual household costs for the same use.
- Forgetting that private use must be excluded.
- Not keeping notes of how the percentage was calculated.
Official source
GOV.UK explains simplified expenses here: Simplified expenses if you work from home.