Working from home is now a normal part of running a business for many women in the UK. Whether you are a freelancer, consultant, or company director, cutting out the daily commute and fitting work around caring responsibilities can make self-employment far more sustainable. It can also reduce your tax bill, but only if you claim the right working from home expenses in the right way.
HM Revenue and Customs (HMRC) allows self-employed women and limited company directors to claim certain costs associated with using a home office. The rules differ depending on your business structure, and the key test is always whether an expense is “wholly and exclusively” for business purposes. This guide sets out the main reliefs available for the 2026/27 tax year and how to keep your records in order.
Who qualifies for working from home expenses
The first hurdle is proving that you genuinely work from home. HMRC expects you to use part of your property regularly as an office or workspace. If you only dash home to answer emails between client visits, you are unlikely to qualify. The space does not have to be a separate room, but it should be a clearly defined area used mainly for business.
The same “wholly and exclusively” rule applies to equipment. A laptop, desk, or office chair can be claimed if it is bought for work and used for work. If there is any significant private use, you will usually need to restrict the claim. For help setting up an efficient workspace, see our guide to what it really costs to set up a home office.
Claiming as a sole trader
Sole traders have two routes: HMRC’s simplified expenses flat-rate scheme, or a claim based on the actual proportion of business use.
Using the simplified expenses scheme
Under simplified expenses, you claim a fixed monthly amount based on the number of hours you work from home. For the 2026/27 tax year the rates are:
- £10 per month if you work between 25 and 50 hours from home
- £18 per month if you work between 51 and 100 hours from home
- £26 per month if you work 101 hours or more from home
This flat rate covers heat, light, and power. It does not cover rent, mortgage interest, council tax, broadband, or telephone costs. If your actual costs are higher, you may be better off using the actual-cost method. HMRC’s simplified expenses guidance lists the current rates.
Claiming actual home working costs
With actual costs, you apportion your household bills between private and business use on a “fair and reasonable” basis. A common method is floor space. For example, if your home has five usable rooms and you use one room 90% of the time for business, you could claim one-fifth of the relevant bills multiplied by 90%.
Costs you can include are a proportion of rent, mortgage interest (not capital repayments), council tax, water, broadband, and phone line rental. You can also claim business calls made from a personal phone. Keep the calculation simple, consistent, and backed up by meter readings, bills, or a diary of hours.
Be careful about claiming 100% business use of a room. If a room is used exclusively for business, part of any gain when you sell your home could become chargeable to Capital Gains Tax. Keeping the room available for some personal use, for example as a guest bedroom or study used by the family, usually preserves your Private Residence Relief.
Claiming as a limited company
Directors and employees of limited companies have slightly different options.
Using the HMRC flat-rate allowance
Since 6 April 2020, a limited company can pay directors and employees up to £6 per week (£26 per month, or £312 a year) tax-free for working from home, without needing to keep receipts. This is the simplest route and covers extra household costs such as heating and electricity. HMRC guidance on working from home tax relief confirms the current amount.
Setting up a rental agreement
If your home office costs are significantly higher, you can set up a formal rental agreement between you and your limited company. The company pays you rent, which is tax-deductible for the company and taxable rental income for you. You can then offset allowable property expenses against that income.
This route requires more paperwork: a written agreement, a realistic market rent, and usually a dedicated business room. Because the room is exclusively for business, you may lose some Capital Gains Tax relief on your home. You should also consider business rates, insurance, and mortgage lender consent. For that reason, most directors start with the £6 weekly allowance and only move to a rental agreement after taking professional advice. For a comparison of structures, see our guide to sole trader vs limited company.
Other home office expenses you can claim
Some costs can be claimed regardless of whether you are a sole trader or a company director:
- Broadband and phone: claim the business proportion of your home broadband and the cost of business calls. If the contract is in the company’s name, the company can usually claim the full cost.
- Repairs and maintenance: a proportion of repairs to the room or area used for business may be allowable. For example, if you redecorate a room used 80% for business, 80% of the decorating cost can usually be claimed.
- Extra water use: if your business uses significantly more water than an ordinary household, for example in hairdressing, pet grooming, or food preparation, you can claim the excess.
- Office equipment and software: computers, printers, desks, chairs, shelving, and specialist software are generally allowable if used wholly and exclusively for work. Many items qualify for full tax relief under the Annual Investment Allowance, which HMRC set at a permanent limit of £1 million from April 2023. Check the current Annual Investment Allowance rules on GOV.UK.
Record keeping and Making Tax Digital
Good records are essential. Keep invoices, receipts, and a simple note of how you calculated the business proportion of shared bills. If you use simplified expenses, record the hours you work from home each month. If you use actual costs, keep utility bills and a floor plan or room-use calculation. HMRC can ask to see these for up to five years after the 31 January submission deadline.
From April 2026, Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) becomes mandatory for sole traders and landlords with turnover above £50,000. You will need to keep digital records and submit quarterly updates through MTD-compatible software. Check whether you need to sign up for MTD for ITSA. For a practical checklist, see our Making Tax Digital sole trader guide.
When to ask an accountant
Tax rules change, and every business is different. If you are unsure whether an expense qualifies, or whether simplified or actual costs will save you more tax, speak to a qualified accountant. Getting it right from the start is far easier than unpicking errors later.
Action steps to take now
- Decide whether simplified or actual costs gives you the larger deduction.
- Record your home-working hours each month if using simplified expenses.
- Keep utility bills, receipts, and a written calculation if claiming actual costs.
- Check whether your turnover puts you in scope of MTD for ITSA from April 2026.
- Speak to an accountant before setting up a rental agreement between you and your limited company.
Claiming the right working from home expenses is one of the simplest ways to cut your tax bill legally. Use the HMRC flat-rate allowances if they suit your business, switch to actual costs if your bills are higher, and keep the paperwork to back up every claim.
