Actual costs, apportioned
Best£360Deduction
- Household running costs
- £3,600
- One room of 5, used 50% of the time
- £0
- Business proportion (10.0%)
- £360
- Tax saved at 20%
- £72
Needs bills kept and a basis you can still explain in two years.
Should I claim actual or simplified expenses?
Compares HMRC's flat monthly rate for working from home against claiming the business proportion of your real household costs.
On the figures so far
Actual costs, apportioned gives the larger claim: £360 against £216.
Every figure came from you, and the gap is £144 — well outside rounding.
Refine it in 5 questions below.
The decision
Actual costs, apportioned gives the larger claim: £360 against £216.
£144 better than simplified (flat rate), on the same figures.
- £18/monthFlat rate band
- 10.0%Business proportion
- £144Difference
- 20%Your marginal rate
Why
- At 90 hours a month the flat rate is £18 a month — £216 a year, whatever your bills actually are.
- Apportioning gives 10.0% of £3,600, which is £360.
- At a 20% marginal rate the difference between the two methods is worth £29 a year in tax.
- You can switch methods between years, so this is not the permanent choice that the vehicle one is.
Does this apply to you?
Each of these has to be true. Where your answers settle it we have said so; where they cannot, the test is yours to check.
You work from home for at least 25 hours a month, for the simplified rate. — met, on your answers
ITTOIA 2005 s. 94H
You are unincorporated. — we cannot tell from your answers
ITTOIA 2005 s. 94H
There is an identifiable business use of the space. — met, on your answers
ITTOIA 2005 s. 34
The room is not used exclusively for business, if you own the property. — we cannot tell from your answers
TCGA 1992 s. 224
What this does not model
- Claiming a room as exclusively for business can create a capital gains charge on that share when you sell the home — which is why part-time use is the usual advice.
- Mortgage capital repayments are never deductible; only the interest is.
- The flat rate covers heating, lighting and power only. Business phone and broadband can be claimed on top.
- This is the self-employed treatment. Employees claim under different rules with a lower flat rate.
This is information, not tax or financial advice. It shows how the rules apply to the figures you entered — it does not know the rest of your circumstances. Worth checking with an accountant before you act.
Rates as at 6 April 2026 — the 2026/27 tax year.
What to keep
The figures above are only as good as what sits behind them. These are the records HMRC would ask for.
- A record of hours worked from home each month — the flat rate is banded by hours and HMRC can ask.
- Bills for rent or mortgage interest, council tax, electricity, gas, water, and home insurance.
- The number of rooms in the property and which are used for business.
- For broadband and phone, an itemised bill supporting the business proportion.
- For a company director, the licence agreement or the record supporting the £6 a week.
The dates that matter
| When | What | If you miss it |
|---|---|---|
| 31 January after the tax year | File the return with the claim. | Late filing penalties, and the claim goes in a year later. |
| 5 April, four years after | Claim for an earlier year, or amend the method used. | Out of time. Employees who worked from home under lockdown rules often have unclaimed years here. |
| Each year | Re-test which method is worth more. | Nothing is lost, but the two diverge as bills change — this is not a once-and-for-all choice, unlike the vehicle one. |
How to actually do it
Count the hours
The flat rate is £10 a month for 25–50 hours, £18 for 51–100, and £26 for 101 or more. Count the months separately; they do not have to be the same band.
www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home
Or apportion the real costs
Total the household costs, divide by the number of rooms, then apply the proportion of time that room is used for business. Mortgage capital repayments are never included; interest is.
www.gov.uk/hmrc-internal-manuals/business-income-manual/bim47825
Compare both on your own bills
The flat rate wins for light use in a small home; apportionment wins for heavy use in an expensive one. The gap is often several hundred pounds a year.
If you are a director, use the right route
£6 a week with no records, or a licence agreement at a commercial rate — which is rent in your hands and needs declaring. The flat rate is not available to companies.
If you are employed, check you qualify at all
Employees can only claim where working from home is required, not chosen. The relief is £6 a week or the actual additional cost.
Worked examples
Three situations, worked through. They use the same rules as the tool above, so you can check the arithmetic against a case near your own.
30 hours a month, 4-room house, £4,800 of household costs
- Simplified claim
- £120 a year
- Cost per room
- £1,200
- Business time share
- About 20%
- Actual claim
- About £240
Even light use can beat the flat rate once real bills are apportioned — but £120 of extra deduction is worth about £48 in tax, against the record-keeping.
120 hours a month, 5-room house, £9,000 of household costs
- Simplified claim
- £312 a year
- Cost per room
- £1,800
- Business time share
- About 70%
- Actual claim
- About £1,260
Full-time home working in a normal house makes apportionment worth four times the flat rate. This is the case where the records pay for themselves.
Company director, home office, no licence agreement
- Homeworking allowance
- £6 a week
- Annual claim
- £312
- Records needed
- None
- Alternative
- Licence at a commercial rent
The simplified rate is not available to companies at all. £6 a week needs no evidence; a licence produces a bigger deduction but the rent is taxable on you.
The rules behind this
Every figure above comes from one of these. Where we have interpreted rather than calculated, the tool says so.
Simplified home-working expenses are £10, £18 or £26 a month, banded by hours worked from home.
Actual costs are apportioned on a reasonable basis — usually rooms and time.
Employees may only claim where working from home is a requirement of the job.
An employer may pay £6 a week towards homeworking costs with no records and no tax charge.
Exclusive business use of part of a dwelling can restrict private residence relief.
Questions people ask
Can I switch between the two each year?
Yes. Unlike the vehicle choice, the home-working method is not locked to anything — you can use whichever is better in each tax year, as long as you meet the conditions for it.
Can I include my mortgage?
The interest, apportioned, yes. The capital repayment, never — that is buying an asset, not a cost of the business. Rent is fully includable in the apportionment.
Will claiming a home office cost me capital gains tax?
Only if part of the home is used exclusively for business. Keeping some private use of the room — which almost everyone genuinely has — preserves private residence relief in full and barely changes the claim.
What can a company director claim?
£6 a week with no records, or a licence agreement at a market rent. The licence gives a larger corporation tax deduction but the rent is property income in your hands, so the net gain is usually smaller than it looks.
Does the flat rate cover broadband and phone?
No. The simplified rate covers light, heat and power only. Broadband and phone are claimed separately on their business proportion under either method.
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