Use of Home as Office Calculator

What the use of home as office claim actually is

If you run a business from your kitchen table, a spare bedroom or a converted garage, you can claim a slice of your household running costs against your profits. This is what tax people mean by a use of home as office claim, and for most self-employed people it is one of the easiest legitimate ways to reduce a tax bill. The idea is simple and fair: when part of your home doubles up as your workplace, some of the heating, lighting and other bills are really a business cost, so HMRC lets you deduct a reasonable share.

I have prepared hundreds of self-assessment returns over the years, and this is the one expense almost everyone underclaims or overcomplicates. People either forget it entirely or they panic and try to claim half their mortgage. The truth sits comfortably in the middle. Below I will walk you through how it works for 2026/27, the two methods HMRC allows, how broadband and phone fit in, and why limited company directors have to do things differently.

Who this affects

You can claim use of home as office if you are self-employed (a sole trader or in a partnership) and you do at least some of your work from home. That covers a huge range of people: freelancers, consultants, tradespeople doing their quotes and invoicing at home, online sellers, tutors, childminders, designers, drivers who keep their books at the kitchen table, and so on.

It does not need to be your only place of work. A plumber who is out on jobs all day but does an hour of admin most evenings can still claim, and so can a designer who works from home four days a week. What matters is that you genuinely use part of your home for the business. If you are employed under PAYE the rules are different and tighter, and you would look at the work expense tax rebate calculator instead. If you are completely new to all this, our self-employed tax guide for beginners sets out the basics first.

The two methods: flat rate or actual costs

HMRC gives the self-employed a genuine choice. You can use the simplified flat rate, which is quick and needs no receipts, or you can work out the actual costs by apportioning your real bills. You pick whichever gives the better result, and you can switch between them from one tax year to the next.

Method one: the simplified flat rate by hours

The flat rate is based on how many hours you work from home each month. You do not keep utility bills or do any sums on rooms. You simply count your monthly hours of home working and apply HMRC's fixed monthly amounts. These rates have been stable for several years and apply for 2026/27.

The flat rate covers heating, electricity and other general household running costs only. It does not include your telephone or internet, which you claim separately on a business-use basis (more on that below). You can read HMRC's own description of this on the working from home simplified expenses page.

Method two: actual costs apportioned fairly

The actual-costs method takes your real household bills and works out a fair business proportion. The usual approach is to divide by the number of rooms used and then by the time those rooms are used for business. The bills you can include are heating, electricity, council tax, rent and (importantly) only the interest part of a mortgage, never the capital repayment. You can also include a share of metered water if your business uses a meaningful amount, and contents insurance where relevant.

HMRC sets out what counts in its guidance on office, property and equipment expenses. The method is more work and you must keep your bills, but for anyone with high heating costs or who works from home full time it can comfortably beat the flat rate.

Worked example one: Priya, a part-time bookkeeper

Priya is a self-employed bookkeeper. She works from her spare room for about three evenings a week plus some weekend catch-up, which adds up to roughly 60 hours a month. She has no patience for keeping every utility bill, so the flat rate suits her perfectly.

At 60 hours a month she falls in the 51 to 100 band, so she claims £18 a month. Over the full year that is £216. She also pays £35 a month for broadband and reckons about a quarter of her usage is business, so she adds roughly £105 a year for that. Her total home claim is around £321. Quick, defensible, and no shoebox of receipts. If Priya wants to see how that deduction flows through to her bill, she can run the numbers through the self-employed tax calculator.

Worked example two: Daniel, a full-time designer

Daniel is a freelance graphic designer who works from a dedicated study five days a week, around 160 hours a month. The flat rate would give him the top band of £26 a month, or £312 a year. But his actual costs tell a different story, so let us do the maths properly.

His annual household bills are: gas and electricity £2,400, council tax £2,200, and rent £14,400. That is £19,000 of relevant running costs. His flat (excluding the bathroom, kitchen and hallway) has four usable rooms, one of which is his study. So one quarter of the costs relate to that room, which is £4,750. He uses the study for business about 80% of the time and for personal use the rest, so he claims 80% of £4,750, which is £3,800 a year.

That is more than ten times the flat rate. For Daniel, keeping his bills and doing the apportionment is clearly worth the effort. Notice he used council tax and rent but did not try to claim anything that was not a genuine running cost. If Daniel were a landlord too, he would keep this home-office claim entirely separate from any property income he reports through the rental income tax calculator.

Claiming broadband and phone

Whichever method you use for the household costs, your broadband and phone are dealt with separately. The principle is business use. If you already pay for home broadband regardless of the business, you can only claim the additional business proportion, not the whole bill. A sensible business-use percentage that you can justify is the right approach. A mobile used mainly for work, or a dedicated business line, can be claimed in full or close to it.

Be honest and consistent. If you tell HMRC your broadband is 90% business but you also stream films every night, that will not hold up. A quarter to a half is a common and credible figure for someone who works from home regularly. Keep a note of how you arrived at the percentage, because that single sentence is usually all the evidence you ever need.

Common mistakes people actually make

• Claiming mortgage capital, not just interest. Only the interest part of a mortgage is an allowable cost. The repayment of the loan itself is never deductible.
• Mixing the two methods in the same year. You use the flat rate or actual costs for household running costs in a given year, not both. You can switch year to year, but do not double up.
• Claiming a room as 100% business use. If a room is used exclusively and only for business, it can in theory create a small capital gains tax issue when you sell, and HMRC may question it. Keeping some personal use of the room (even occasional) avoids this and is usually more realistic anyway. If property gains are on your radar, the capital gains tax on property calculator is worth a look.
• Forgetting broadband and phone. People who use the flat rate often assume it covers everything. It does not include phone or internet, so claim those on top.
• Overclaiming and underclaiming. Half a mortgage is too much. Nothing at all is too little. Aim for fair and you will be fine.

How limited companies differ

If you run your business through a limited company, the use of home rules change because you and the company are separate legal persons. You cannot simply deduct a slice of your personal bills in the company accounts the way a sole trader does. Instead, directors usually have one of two options.

The simple route is for the company to pay you a small fixed allowance, currently £6 a week (£312 a year) with no need for evidence. The more generous route is a formal rental licence agreement between you and your company, where the company pays you rent for using part of your home. That rent is rental income on your personal tax return, so you offset the relevant household costs against it, and there is some admin to get right. For most small companies the £6 a week is the easy, safe default. If you are weighing up how you pay yourself overall, our guide on salary versus dividends for directors and the dividend vs salary calculator will help, and the limited company tax calculator shows the wider picture.

How to use this calculator

This tool does the comparison for you so you do not have to second-guess yourself. Here is the quickest way to get an accurate answer:

• Estimate your average hours worked from home each month. Be realistic, not optimistic.
• Enter your annual household bills if you want the actual-costs comparison: gas, electricity, council tax, rent or mortgage interest.
• Tell it how many rooms you use and roughly what proportion of the time the work room is used for business.
• Add your broadband and phone costs and a sensible business percentage.

The calculator then shows you the flat rate figure next to the actual-costs figure, so you can see at a glance which is better for you. From there you can carry the deduction into your full tax position using the self-assessment tax calculator or, if you only need a quick income check, the income tax calculator.

Next steps and a quick word on deadlines

Once you know your claim, it goes in the self-employment section of your self-assessment return as part of your allowable expenses. There is no separate form and no need to send HMRC your bills, but do keep them (and your hours note) for at least five years after the filing deadline in case of any query. In practice HMRC very rarely challenges a sensible home claim, so there is no need to lose sleep over it.

If you are worried about timing, the online return for 2026/27 is due by 31 January 2028, and our self-assessment deadlines guide and the tax deadline tracker will keep you on the right side of it. Penalties for late filing are real but avoidable, and the self-assessment penalty calculator shows exactly what is at stake if you do slip.

A short disclaimer: the figures above are for the 2026/27 tax year and are intended as general guidance, not personal advice. Everyone's home, hours and bills are different, so do check your own situation against the latest gov.uk guidance or speak to an accountant before you file. Get this one right and it is a small, steady saving that quietly adds up year after year.

Who should use this tool

If you work from home you can claim a share of household costs against tax. There are two routes: HMRC’s simplified flat rate based on hours worked per month, which needs no records, or the actual costs method apportioning real bills by rooms and usage.

The flat rate is quick but modest. Actual costs usually give more, particularly with high energy bills or a dedicated room, but require you to keep bills and justify the apportionment. This compares both so you can see whether the record-keeping is worth it.

What this tool assumes

• The simplified flat rate applies where you work 25 or more hours a month from home, with the amount stepping up by hours banded.
• The actual costs method apportions bills by the proportion of rooms used and the proportion of time they are used for business.
• Relief is worth your marginal tax rate of the deduction, not the full amount.
• The claim relates to genuine business use, not occasional evening email.

Limitations — what it does not cover

• Employees versus the self-employed. Employees can only claim where they are required to work from home, and the relief is much more restricted.
• Capital Gains Tax risk where a room is used exclusively for business, which can restrict Private Residence Relief on sale — part-time use of a room avoids this.
• Mortgage interest and rent, allowable for the self-employed under actual costs but not for employees.
• Business rates, which can apply where part of a property is used solely for business.
• Record keeping to support an actual-costs claim.
• Broadband and phone, which are apportioned separately.