If you work from home, whether as a sole trader, a contractor through your own limited company, or a partner in a partnership, you can claim a deduction for the business use of your home. HMRC gives you two routes: a flat rate of £6 per week with no questions asked, or a detailed calculation based on your actual costs. The right choice depends on how much of your home you use for business and what your actual bills look like.
This article covers both methods for the 2025/26 tax year, with worked examples and the record-keeping requirements for each. We are ICAEW qualified accountants and work with UK businesses of every shape, from sole traders in Sheffield to limited companies in London.
The £6 Per Week Simplified Method
HMRC's flat rate for home office use is £6 per week. That is £312 per year. You do not need to provide any receipts, calculate floor areas, or split your broadband bill. You simply enter the amount on your tax return and it is allowed as a deduction against your trading profits.
This method is designed for people who use part of their home for business tasks but do not have a dedicated room used exclusively for work. If you answer emails from the kitchen table, take client calls from the living room, or do your bookkeeping on a laptop in the spare bedroom that also stores your suitcases, the £6 rate is for you.
There is no requirement to work a minimum number of hours. If you do any business activity at home in a given week, you can claim the £6 for that week. If you work from home 52 weeks of the year, you claim £312. If you worked from home for 20 weeks, you claim £120.
The £6 rate applies per person, not per business. If you and your spouse both run separate businesses from the same home, you each claim £6 per week. If you run two different trades from home, you still claim £6 per week total, not £12.
Who Should Use the Simplified Method
Use the £6 rate if your actual costs are low, your home office use is minimal, or you do not want the administrative hassle of calculating and justifying actual costs. It is also the right choice if you rent a room or live in shared accommodation where you cannot easily isolate your share of household bills.
For most sole traders and contractors working from home a few hours a week, the £6 rate is sufficient and HMRC will not challenge it.
The Actual Costs Method
If your business use of home is more substantial, you can claim a proportion of your actual household costs instead of the flat rate. This typically yields a higher deduction, but it requires more record keeping and a defensible calculation methodology.
You can claim a proportion of the following costs:
- Mortgage interest (not capital repayments) or rent
- Council tax
- Water rates
- Gas and electricity
- Buildings and contents insurance
- Broadband and telephone line rental
- Cleaning and repairs to the room you use
You cannot claim a proportion of mortgage capital repayments, food, or general home improvements that benefit the whole property.
How To Calculate Your Claim
You need a fair and reasonable method for apportioning costs. The most common approach is the room count method.
Count the total number of rooms in your home (excluding bathrooms, hallways, and kitchens unless you use them exclusively for business). Divide by the number of rooms you use for business. Then multiply each household bill by that fraction. Then multiply by the proportion of time you use the room for business.
Here is a worked example. A freelance graphic designer in Bristol lives in a two-bedroom flat. She uses the second bedroom as her office, working 35 hours per week from home. The flat has four rooms: living room, kitchen, bedroom, and office. She uses the office 100% for business.
Her annual costs:
- Rent: £9,600
- Council tax: £1,800
- Gas and electricity: £1,200
- Broadband: £360
- Contents insurance: £120
- Total: £13,080
Room count: 4 rooms. One room used exclusively for business. Business fraction: 1/4 = 25%.
Claim: £13,080 x 25% = £3,270.
Compare that to the £312 flat rate. The actual costs method gives her an extra £2,958 in deductions, saving her £592 in income tax at the basic rate (20%) or £1,183 at the higher rate (40%). The extra record keeping is clearly worth it.
When the Room Is Not Exclusive
If your office doubles as a guest bedroom or a storage room for personal items, you need to factor in the proportion of time it is used for business. A common approach is to calculate business use on an hourly basis.
Example: A consultant in Manchester uses the dining room as his office 30 hours per week, 48 weeks per year. The room is used for personal purposes the rest of the time. The house has 6 rooms. Business fraction: 1/6 = 16.67%. Time fraction: 30 hours out of 168 hours per week = 17.86%.
Total household costs: £15,000. Claim: £15,000 x 16.67% x 17.86% = £446.
In this case, the £6 flat rate of £312 is close enough that many people choose the simpler option. The difference is £134 in deductions, saving £27 in tax at 20% or £54 at 40%. That may not be worth the calculation time.
Limited Company Directors and Home Office Claims
If you are a director of your own limited company and work from home, the rules are slightly different. Your company can reimburse you for home office costs, or you can claim a deduction on your personal self assessment return if you use your home for company business.
The company can pay you up to £6 per week (£312 per year) tax free and without the need for receipts, under HMRC's benchmark rates. This is treated as a tax deductible expense for the company and is not a taxable benefit for you. The company simply processes it through payroll or as a reimbursement.
If your actual costs are higher, the company can reimburse you the exact amount of additional household costs incurred because of the business use. You need to calculate this using the actual costs method above, and keep the records at the company. The reimbursement is tax deductible for the company and not taxable for you, provided it does not exceed the actual additional costs.
For a detailed breakdown of how director salary and dividend planning interacts with home office claims, see our director pay and dividends guide.
What HMRC Expects You To Keep
If you use the £6 flat rate, you need no receipts. You just need a note in your records confirming that you worked from home during the weeks claimed. A simple diary entry or calendar log is sufficient.
If you use the actual costs method, keep:
- Copies of your household bills (gas, electricity, broadband, rent, council tax)
- A floor plan or room count showing how you calculated the business proportion
- A log of the hours you worked from home, especially if the room is not exclusive
- The calculation itself, showing each step
HMRC can ask for this evidence if they enquire into your tax return. If you cannot produce it, they may disallow the claim and charge interest and penalties. The risk is low for small claims, but it exists.
Claiming on Your Tax Return
Sole traders and partners claim home office costs on the self employment pages of the self assessment return (SA103). The amount goes in the "use of home as office" box under allowable expenses. For the 2025/26 return, this is straightforward if you use accounting software like FreeAgent, Xero, or QuickBooks, which have dedicated fields for this expense.
If you use the £6 flat rate, enter £312 (or your actual weeks multiplied by £6). If you use actual costs, enter the calculated figure.
Limited company directors claim home office costs through the company's accounts, not through personal self assessment. The company enters the reimbursement as an expense in its profit and loss account, and processes it through payroll or as a director's expense claim.
If you are unsure which method applies to your situation, contact our team. We can review your specific circumstances and confirm the correct approach for your 2025/26 return.
Common Mistakes
The most common mistake is claiming both the £6 flat rate and actual costs in the same year. You choose one method for the whole tax year. You cannot mix them.
The second most common mistake is claiming a proportion of mortgage capital repayments. Only mortgage interest is allowable. Capital repayments reduce your loan balance and are not a deductible expense.
The third mistake is claiming for a room that is used exclusively for business but also has personal items stored in it. If your "office" contains your child's toys, your Christmas decorations, or your personal filing cabinet, it is not exclusive. You need to apply the time apportionment.
When To Use an Accountant
The £6 flat rate is simple enough that most people can handle it themselves. The actual costs method is also manageable if your situation is straightforward. But if you have a complex home layout, multiple business activities, or a home office that is also used by employees, the calculations get harder.
If your home office claim is over £1,000, or if you are unsure about the exclusivity of the room, speak to a qualified accountant. We are ICAEW qualified accountants and deal with home office claims regularly for clients across all sectors. A small fee for a review can save you a much larger tax bill if HMRC challenges your claim.
Final Point on the £6 Rate
The £6 per week rate has not changed for years. It is deliberately low to keep things simple. If your actual costs are higher, do the calculation. The extra paperwork takes an hour once a year and can save you hundreds of pounds in tax.
If your actual costs are lower, use the £6 rate anyway. You are not required to prove your actual costs are at least £6 per week. The flat rate is an option, not a cap.
For more guidance on running your business finances, visit our business fundamentals page or browse our bookkeeping and compliance articles.